Stock Quotes in this Article: ACH, JRCC, MDR, MSPD, SOL

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 Unilife (UNIS), which ripped higher by 11.6%; Hanwaha Solarone (HSOL), which soared higher by 9.8%; Bio Telemetry (BEAT), which jumped higher by 8.6%; and ArQule (ARQL), which trended up 8%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

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.

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

ReneSola


One under-$10 name that's starting to move within range of triggering a big breakout trade is ReneSola (SOL), a manufacturer of solar wafers and producer of solar power products based in China. This stock has been on fire so far in 2013, with shares up sharply by 183%.

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If you take a look at the chart for ReneSola, you'll notice that this stock has been uptrending very strong for the last four months and change, with shares soaring higher from its low of $1.25 to its recent high of $4.85 a share. During that uptrend, shares of SOL have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of SOL have pulled back a bit during the last few weeks, with the stock coming off that high of $4.85 to its recent low of $3.52 a share. This stock has now started to bounce off that $3.52 low and it's quickly moving within range of triggering a big breakout trade.

Traders should now look for long-biased trades in SOL if it manages to break out above some near-term overhead resistance levels at $4.25 to $4.50 a share and then once it clears its 52-week high at $4.85 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 2.09 million shares. If that breakout triggers soon, then SOL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $7 to $8 a share.

Traders can look to buy SOL off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $3.31 a share. One can also buy SOL 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.

James River Coal

Another under-$10 energy player that's starting to move within range of triggering a near-term breakout trade is James River Coal (JRCC), which is engaged in mining, processing and selling thermal and metallurgical coal through eight active mining complexes located throughout eastern Kentucky, southern West Virginia and southern Indiana. This stock has been hit hard by the sellers so far in 2013, with shares off by 38%.

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If you take a look at the chart for James River Coal, you'll notice that this stock has been trending sideways for the last two months inside of a consolidation pattern, with shares moving between $1.70 on the downside and $2.32 on the upside. Shares of JRCC are now starting to trend back above its 50-day moving average of $1.94 a share. That move is quickly pushing JRCC within range of triggering a near-term breakout trade above the upper-end of its recent sideways trading chart pattern.

Market players should now look for long-biased trades in JRCC if it manages to break out above some near-term overhead resistance levels at $2.20 to $2.32 a share and then once it clears its 200-day moving average at $2.48 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 1.16 million shares. If that breakout triggers soon, then JRCC will set up to re-test or possibly take out its next major overhead resistance levels at $2.88 to $3.50 a share, or possibly even $4 a share.

Traders can look to buy JRCC off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at either $1.74 or at $1.70 a share. One can also buy JRCC 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.

McDermott International

One under-$10 engineering player that's trending very close to triggering a big breakout trade is McDermott International (MDR), an engineering, procurement, construction and installation company engaged on designing and executing complex offshore oil and gas projects. This stock has been hit hard by the bears so far in 2013, with shares off by 31%.

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If you take a look at the chart for MDR, you'll notice that this stock recently gapped down sharply from close to $9 a share to its recent low of $6.68 a share with heavy downside volume. Following that move, shares of MDR have started to rebound off that $6.68 low, and the stock is now starting to move within range of triggering a major breakout trade.

Traders should now look for long-biased trades in MDR if it manages to break out above some near-term overhead resistance at $7.74 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 4.33 million shares. If that breakout triggers soon, then MDR will set up to re-fill some of its previous gap down zone from August that started near $9 a share. If MDR gets into that gap with volume, then this stock could easily hit $9 to $10 a share.

Traders can look to buy MDR off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $7.04 o around its recent low of $6.68 a share. One can also buy MDR off strength once it takes out $7.74 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Aluminum Corp. of China

Another under-$10 basic materials player that's starting to move within range of triggering a big breakout trade is Aluminum Corp. of China (ACH), a vertically integrated aluminum producer. This stock has been under pressure so far in 2013, with shares off by 27%.

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If you take a look at the chart for Aluminum Corp. of China, you'll notice that this stock has been uptrending strong for the last two months, with shares moving higher from its low of $7.24 to its recent high of $8.86 a share. During that uptrend, shares of ACH have been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend is coming after shares of ACH plunged lower from $10.73 to $7.24 a share between May and June. This stock has now started to trend back above its 50-day at $8.10 a share and it's quickly moving within range of triggering a big breakout trade.

Market players should now look for long-biased trades in ACH if it manages to break out above some near-term overhead resistance at $8.86 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 111,653 shares. If that breakout triggers soon, then ACH will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $10.02 a share to around $11 to $12 a share.

Traders can look to buy ACH off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $8.10 a share, or below more near-term support at $7.66 a share. One can also buy ACH off strength once it clears $8.86 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Mindspeed Technologies

One final under-$10 semiconductor player that looks ready to trigger a major breakout trade is Mindspeed Technologies (MSPD), which designs, develops and sells semiconductor networking solutions for communications applications in enterprise, access, metropolitan and area networks. This stock has been under control of the bears so far in 2013, with shares off by 35.9%.

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If you take a look at the chart for the Mindspeed Technologies, you'll notice that this stock has been trending sideways for the last four months inside of a consolidation pattern, with shares moving between $2.75 on the downside and $3.58 on the upside. Shares of MSPD have pulled back in the last two months from that $3.58 a share to $2.75 a share. The stock has formed a near-term double bottom off that pullback at $2.75 to $2.77 a share. Shares of MSPD are now starting to break out above some near-term overhead resistance at $2.95 a share today. That move is quickly pushing MSPD within range of triggering a major breakout trade.

Traders should now look for long-biased trades in MSPD if it manages to break out above its 50-day at $3.14 a share and then once it takes out more near-term overhead resistance levels at $3.58 to its 200-day at $3.61 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 479,780 shares. If that breakout triggers soon, then MSPD will set up to re-test or possibly take out its next major overhead resistance levels at $4.25 to $4.50 a share. Any high-volume move above those levels will then put $5 to its 52-week high at $5.27 into range for shares of MSPD.

Traders can look to buy MSPD off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $2.77 to $2.75 a share. One can also buy MSPD 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.