Stock Quotes in this Article: ANR, BIOD, IDIX, HZNP, ANAC

 DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share or less don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.

>>5 Must-See Charts to Buy in July

Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Kimber Resources (KBX), which soared higher by 24%; Jiayuan.com (DATE), which ripped higher by 22.5%; UQM Technologies (UQM), which spiked higher by 22%; and USEC (USU), which trended up 18.7%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

One low-priced stock that recently skyrocketed higher was solar power player LDK Solar (LDK), which I highlighted in June 27's "5 Stocks Under $10 Set to Soar" at $1.37 a share. I mentioned in that piece that shares of LDK were starting to come out of a downtrend as the stock was moving back above its 200-day moving average, and it was trending within range of its 50-day moving average. That move was setting up LDK for a potential breakout trade above a key downtrend line.

>>5 Stocks Set to Soar on Bullish Earnings

Guess what happened? Shares of LDK started to flirt with that breakout the following week after the stock hit a high $1.43 to $1.49 a share. Then on Monday of this week LDK triggered that breakout in spades with heavy upside volume of 6.22 million shares versus its three-month average of 2.39 million shares. Shares of LDK rocketed higher on Tuesday and hit a high of $2 a share. That represents a gain of 45% in a very short time frame for anyone who bought the stock in anticipation of the move. Once LDK broke above its downtrend line with volume the stock exploded, so you can see how powerful trading breakouts can be when they trigger.

Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames.

>>Beat the S&P With 5 Stocks Wall Street Hates

I'm not as eager to recommend investing long-term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren't great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.

When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns.

>>6 Stocks Under $10 Triggering Major Breakouts

With that in mind, here's a look at several under-$10 stocks that look poised to trade higher from current levels.

Biodel

One under-$10 stock that looks ready to trigger a major breakout trade is Biodel (BIOD), a specialty biopharmaceutical company focused on the development and commercialization of innovative treatments for diabetes. This stock is off to a monster start in 2013, with shares up around 80%.

This biotech stock has a catalyst on the horizon, since the company plans to report top-line results for its lead product, the insulin treatment Biod-123, by the end of September 2013.

>>3 Biotech Stocks to Watch for Breakout Trades

If you take a look at the chart for Biodel, you'll notice that this stock has been trending sideways for the last month and change, with shares moving between $3.93 on the downside and $5.11 on the upside. Shares of BIOD have just started to break out above some near-term overhead resistance at $4.46 a share, and it's now moving within range of triggering a major breakout trade above the upper-end of its recent range.

Traders should now look for long-biased trades in BIOD if it manages to break out above some near-term overhead resistance levels at $4.46 to its 52-week high at $5.11 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 304,856 shares. If that breakout triggers soon, then BIOD will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $6 to $8 a share.

Traders can look to buy BIOD off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $4.01 a share or below more support at $3.93 a share. One can also buy BIOD off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Anacor Pharmaceuticals

Another under-$10 stock that's starting to move within range of triggering a near-term breakout trade is Anacor Pharmaceuticals (ANAC), which is engaged in the discovery, development and commercialization of novel small molecule therapeutics derived from its novel boron chemistry platform. This stock is off to a strong start in 2013, with shares up sharply by 31%.

This company has a catalyst on the horizon, since the firm will present pivotal phase 3 data for Tavaborole, a novel boron-based molecule for the topical treatment of toenail onychommycosis, on July 22 at the APMA Annual Scientific Meeting held in Las Vegas.

>>4 Biotech Stocks Under $10 Making Big Moves

If you take a look at the chart for Anacor Pharmaceuticals, you'll notice that this stock has uptrending for the last two months, with shares moving higher from its low of $4.83 to its recent high of $6.93 a share. During that uptrend, shares of ANAC have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ANAC within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in ANAC if it manages to break out above some near-term overhead resistance levels at $6.93 to $7.09 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average volume of 452,332 shares. If that breakout triggers soon, then ANAC will set up to re-test or possibly take out its 52-week high at $8.25 a share. Any high-volume move above that level will then give ANAC a chance to tag $9 to $10 a share.

Traders can look to buy ANAC off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at $5.73 a share. One can also buy ANAC off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

This stock also has a decent amount of bears involved in the name, since the current short interest as a percentage of the float for ANAC is pretty high at 8.9%. The bears have also been increasing their bets from the last reporting period by 10.2%, or by about 226,000 shares. If that breakout triggers soon, then the shorts could get caught in a vicious short-squeeze, so make sure to have this name on your breakout trading radar.

Horizon Pharma

One under-$10 name that's starting to trend within range of triggering a major breakout trade is Horizon Pharma (HZNP), a specialty pharmaceutical company that, through its subsidiaries, develops and commercializes medicines for the treatment of arthritis, pain and inflammatory diseases. This stock is off to a decent start in 2013, with shares up by 14.5%.

>>5 Rocket Stocks Ready for Blastoff in July

If you take a look at the chart for Horizon Pharma, you'll notice that this stock has been trending range bound since last November, with shares moving between $1.97 on the downside and $2.95 on the upside. Shares of HZNP have just started to trend back above both its 50-day and 200-day moving averages, and it recently broke out above some near-term overhead resistance levels at $2.52 to $2.58 a share. That move is quickly pushing shares of HZNP within range of triggering a major breakout trade outside of that range it's been in for the last 9 months.

Traders should now look for long-biased trades in HZNP if it manages to break out above some past overhead resistance levels at $2.95 to $3 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 294,349 shares. If that breakout triggers soon, then HZNP will set up to re-test or possibly take out its next major overhead resistance levels at $3.50 to $4 a share. Any high-volume move above $4 will then give HZNP a chance to re-fill its previous gap-down zone from last September that started above $4.50 a share.

Traders can look to buy HZNP off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at $2.41 a share, or below more support at $2.31 a share. One can also buy HZNP off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

This stock is another favorite of the short-sellers, since the current short interest as a percentage of the float for HZNP is pretty high at 11.1%. The bears have also been increasing their bets from the last reporting period by 3.3%, or by about 152,000 shares. HZNP has some serious short-squeeze potential, so make sure to be ready if that breakout triggers soon.

Idenix Pharmaceuticals

Another under-$10 name that's trending within range of triggering a major breakout trade is Idenix Pharmaceuticals (IDIX), a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of human viral diseases, with operations in the U.S. and Europe. This stock has been hit hard by the sellers so far in 2013, with shares off by 24.9%.

>>5 Earnings Stocks Everyone Hates -- but You Should Love

If you take a look at the chart for Idenix Pharmaceuticals, you'll notice that this stock recently gapped down sharply from $5.25 to $3.35 a share with heavy downside volume. Following that gap down, shares of IDIX went on to hit a new low or $3.15 a share. This stock has now started to rebound off that $3.15 low, and it's quickly moving within range of triggering a major breakout trade above its gap-down-day high.

Market players should now look for long-biased trades in IDIX if it manages to break out above some near-term overhead resistance at $3.72 a share and then once it clears its gap down day high of $3.75 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.06 million shares. If that breakout triggers soon, then IDIX will set up to re-fill some of its previous gap-down zone from late June that started near $5.25 a share. Some possible upside targets for IDIX if it gets into that gap with volume are its 200-day at $4.33 or $5 a share.

Traders can look to buy IDIX off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term at $3.25 a share. One can also buy IDIX off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

This stock is a favorite target of the bears, since the current short interest as a percentage of the float for IDIX is very high at 15.2%. If IDIX can break out into that gap, then we could easily see a sharp short-covering rally develop as the bears look to lock in some of their profits from the gap down.

Alpha Natural Resources

One final under-$10 stock that looks ready to trigger a big breakout trade is Alpha Natural Resources (ANR), a supplier and exporter of metallurgical coal for use in the steel-making process and a major supplier of thermal coal to electric utilities and manufacturing industries across the country. This stock has been destroyed by the bears so far in 2013, with shares down big by 40%.

>>5 Stocks Rising on Unusual Volume

If you take a look at the chart for Alpha Natural Resources, you'll notice that this stock has just started to come out of a long downtrend, which saw shares of ANR plunge lower from $9.90 to its recent low of $4.82 s share. After hitting that $4.82 low, shares of ANR have started to uptrend, with the stock soaring from $4.82 to its intraday high of $5.88 a share. During that move, shares of ANR have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ANR within range of triggering a big breakout trade.

Traders should now look for long-biased trades in ANR if it manages to break out above some near-term overhead resistance levels at $5.85 to its 50-day moving average at $6.14 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 12.15 million shares. If that breakout triggers soon, then ANR will set up to re-test or possibly take out its next major overhead resistance levels at $7 to its 200-day at $7.77 a share. Any high-volume move above those levels will then give ANR a chance to tag its next major overhead resistance levels at $8.40 to $9 a share.

Traders can look to buy ANR off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $5.30 or $5 a share. One can also buy ANR off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

This is another name that's popular among the short-sellers, since the short interest as a percentage of the float for ANR is very high at 19.4%. A break back above the 50-day for ANR could easily spark a monster short-squeeze, so make sure you're ready to take advantage of that move if it triggers soon.

To see more hot under-$10 equities, check out the Stocks Under $10 Setting Up to Explode portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>5 Tech Stocks to Buy This Summer
>>5 Stocks Insiders Love Right Now

>>2 Financial Stocks Spiking on Big Volume

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.