Stock Quotes in this Article: BAA, CLNT, DRRX, PDII, SNSS

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.

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Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Clean Diesel Technologies (CDTI), which skyrocketed higher by 49.1%; Zhone Technologies (ZHNE), which soared higher by 35.5%; Top Ships (TOPS), which spiked higher by 26.5%; and Mastech (MHH), which jumped higher by 23.4%. 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 exploded higher was solar power player Suntech Power (STP), which I highlighted in June 27's "5 Stocks Under $10 Set to Soar" at $1.05 a share. I mentioned in that piece that shares of STP had recently formed a triple bottom chart pattern, with the stock finding buying interest at 86 cents, 89 cents and 93 cents per share. This stock was starting to bounce off that support zone and move within range of triggering a major breakout trade. That trade was set to hit if STP managed to take out some near-term overhead resistance levels at $1.18 to $1.28 a share with high volume.

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Guess what happened? Shares of STP started to trigger that breakout on July 15 with heavy upside volume. The stock closed at $1.40 a share on that day and then it went on to hit an intraday high of $1.68 a share the following trading session with monster upside volume. Had you bought STP off weakness and anticipated that move, then you would have captured a gain of close to 60% from when my article first hit. Shares of STP are now setting up again for another breakout trade above $1.68 a share. If that breakout triggers soon, then this stock could easily hit $1.80 a share to north of $2 a share.

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.

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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.

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

Durect

One under-$10 bio therapeutic player that's starting to move within range of triggering a major breakout trade is Durect (DRRX), which develops pharmaceutical products based on its proprietary drug delivery technology platforms. This stock is off to a strong start in 2013, with shares up 27%.

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If you take a look at the chart for Durect, you'll notice that this stock gapped down sharply in May from over $1.70 a share to 78 cents per shares with heavy downside volume. Following that move, shares of DRRX went on to make a low of 76 cents per share before the downside volatility stopped. Shares of DRRX have now been uptrending for the last two months, with shares moving higher from its low of 76 cents to its recent high of $1.32 a share. During that move, shares of DRRX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of DRRX within range of triggering a major breakout trade.

Traders should now look for long-biased trades in DRRX if it manages to break out above some near-term overhead resistance levels at $1.18 to $1.32 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 814,836 shares. If that breakout triggers soon, then DRRX will set up to re-fill its previous gap down zone from May that started close to $1.70 a share. Any high-volume move above $1.85 to $1.90 a share will then put its next major overhead resistance levels at $2.28 to $2.50 into range for shares of DRRX.

Traders can look to buy DRRX off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $1.05 to its 50-day at 97 cents per share. One can also buy DRRX 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.

Cleantech Solutions

Another under-$10 stock that's starting to move within range of triggering a near-term breakout trade is Cleantech Solutions (CLNT), which, through its subsidiaries, manufactures and sells forged products and fabricated products to a range of clean technology customers in the PeopleĀ’s Republic of China.. This stock is off to a hot start in 2013, with shares up sharply by 40.5%.

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If you take a look at the chart for Cleantech Solutions, you'll notice that this stock has recently formed a triple bottom chart pattern, since buyers have swopped in to support the price at $5.16, $5 and $5.08 per share. Shares of CLNT have now started to bounce off that support zone and move back above its 50-day moving average of $5.52 a share. That bounce is quickly pushing the stock within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in CLNT if it manages to break out above some near-term overhead resistance levels at $5.87 to $6.50 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 758,917 shares. If that breakout triggers soon, then ANAC will set up to re-test or possibly take out its next major overhead resistance levels at $7.60 to $9 a share. Any high-volume move above $9 will then give CLNT a chance to tag its 52-week high at $10.85 a share.

Traders can look to buy CLNT off any weakness to anticipate that breakout and simply use a stop that sits right below $5 a share or down near more support at $4.50 a share. One can also buy CLNT 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 short sellers, since the current short interest as a percentage of the float for CLNT is very high at 20.7%. If that breakout triggers soon, then shares of CLNT could experience a monster short squeeze, so make sure to keep this name on your breakout trading radar.

PDI

An under-$10 name health care stock that's trending very close to triggering a major breakout trade is PDI (PDII), which provides outsourced commercial services to established and emerging pharmaceutical, biotechnology and health care companies in the U.S. This stock has been under pressure by the sellers so far in 2013, with shares off by 37.6%.

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If you take a look at the chart for PDI, you'll notice that this stock has been uptrending for the last month, with shares moving higher from its low of $4.08 to its recent high of $4.85 per share. During that move, shares of PDII have been making mostly higher lows and higher highs, which is bullish technical price action. This stock has also just started to trend back above its 50-day moving average of $4.47 a share. That move has now pushed shares of PDII within range of triggering a major breakout trade.

Traders should now look for long-biased trades in PDII if it manages to break out above some near-term overhead resistance levels at $4.85 to just over $5 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 81,784 shares. If that breakout triggers soon, then PDII will set up to re-test or possibly take out its next major overhead resistance levels at $5.99 to its 200-day moving average at $6.07 a share. Any high-volume move above its 200-day will then put its next major overhead resistance levels at $6.44 to $7 into range for shares of PDII.

Traders can look to buy PDII off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average at $4.47 a share, or below more support at $4.23 to $4.08 a share. One can also buy PDII 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.

Sunesis Pharmaceuticals

Another under-$10 stock that's starting to move within range of triggering a major breakout trade is Sunesis Pharmaceuticals (SNSS), which is engaged in the development and commercialization of new oncology therapeutics for the treatment of solid and hematologic cancers. This stock is off to a bullish start in 2013, with shares up 34.2%.

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If you take a look at the chart for Sunesis Pharmaceuticals, you'll notice that this stock has been trending sideways and consolidating for the last five months, with shares moving between $4.71 on the downside and $6.05 on the upside. Shares of SNSS have just started to trend back above its 50-day moving average at $5.35 a share. That move is starting to push this stock within range of triggering a breakout trade above the upper-end of its sideways trading chart pattern.

Market players should now look for long-biased trades in SNSS if it manages to break out above some near-term overhead resistance levels at $5.75 to $6 a share and then once it takes out more resistance at $6.05 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 351,087 shares. If that breakout triggers soon, then SNSS will set up to re-test or possibly take out its 52-week high at $6.85 a share. Any high-volume move above $6.85 will then give SNSS a chance to tag $8 to $9 per share.

Traders can look to buy SNSS off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $5.35 a share, or below its 200-day at $5.10 a share. One can also buy SNSS 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 SNSS is extremely high at 20.7%. If SNSS can breakout soon and enter new 52-week-high territory, then this stock could cause some serious pain for the short-sellers. Make sure to set your alerts on SNSS for the breakout in case we get it soon.

Banro

One final under-$10 name that looks ready to trigger a big breakout trade is Banro (BAA), which is engaged in the exploration and development of four gold properties, known as Twangiza, Namoya, Lugushwa and Kamituga. This stock has been destroyed by the bears so far in 2013, with shares down huge by 60.7%.

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If you take a look at the chart for Banro, you'll notice that this stock has been uptrending strong for the last month and change, with shares soaring higher from its low of 62 cents per share to its recent high of $1.19 a share. During that uptrend, shares of BAA have been consistently making higher lows and higher highs, which is bullish technical price action. What's significant about this recent uptrend is that it's coming after a massive downtrend that took BAA from $2.59 to that 62-cent low. Shares of BAA are now quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in BAA if it manages to break out above some near-term overhead resistance levels at $1.19 to $1.27 a share and then once it clears more resistance at $1.33 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 842,235 shares. If that breakout triggers soon, then BAA will set up to re-test or possibly take out its next major overhead resistance levels at around $2.10 to its 200-day moving average at $2.26 a share. Any high-volume move above $2.26 will then put its net major resistance levels at $2.87 to $3.15 into range for shares of BAA.

Traders can look to buy BAA off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at 92 cents per share, or below more support at 85 cents per share. One can also buy BAA 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.

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.

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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.