Stock Quotes in this Article: IMUC, JVA, NLS, VRNG, GEVO

WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street where stocks trading near or under $10 a share 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.

Just take a look at some of the hot movers in the under-$10 complex Thursday, including Endeavour International (END), which skyrocketed higher by 70%; Severn Bancorp (SVBI), which soared 46%; Microvision (MVIS), which ripped higher by 38%; and Elephant Talk Communications (ETAK), which closed up 29%. You don’t even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

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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.

 

Vringo

One under-$10 name that’s trending very close to triggering a major breakout trade is Vringo (VRNG), which is engaged in developing software for mobile phones. It provides a platform that allows users to create, download and share mobile entertainment content in the form of video ringtones for mobile phones. This is one of the hottest stocks so far in 2012, with shares up over 280%.

If you take a look at the chart for Vringo, you’ll notice that this stock has been uptrending strong for the past six months, with shares soaring from a low of 68 cents to a recent high of $4.51 a share. During that uptrend, shares of Vringo have mostly made higher lows and higher highs, which is bullish technical price action. Now this stock is pushing higher and trading within range of triggering a major breakout trade.

Traders should now look for long-biased trades in VRNG if it can manage to trigger a breakout above some near-term overhead resistance at $3.93 to $4.51 a share with high volume. Look for a sustained move or close above those levels with volume that’s near or above its three-month average action of 2.3 million shares. If we get that action soon, then VRNG will enter new 52-week-high territory above $4.51 a share. That will set this stock up for a possible move to $6 a share or higher in the near future.

Keep in mind that VRNG will need to take out $4.51 with volume to have a chance of spiking significantly higher. That said, I would be looking to get long off a decent volume move through $3.93 to anticipate that move over $4.51.

I also included Vringo in my list of Facebook IPO Sympathy & Derivative Stock Plays.

Coffee Holding

An under-$10 stock in the food processing complex that looks ready to trigger a near-term breakout is Coffee Holding (JVA), an integrated wholesale coffee roaster and dealer in the U.S. This stock has traded virtually flat so far in 2012, with shares up just 0.5%.

If you take a look at the chart for Coffee Holding, you’ll notice that this stock has been crushed by the sellers in the last three months, with shares dropping from a high of $14.88 to a recent low of $6.50 a share. During that huge move lower, shares of Coffee Holding have consistently made lower highs and lower lows, which is bearish technical price action. That said, the stock has started to tend up in the last few week, since it has moved off that $6.50 low to its recent high of $7.93 a share. That move has pushed JVA within range of triggering a near-term breakout trade.

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Market players should now look for long-biased trades in JVA if it can manage to trigger a break out trade above some near-term overhead resistance at $7.93 to $8.25 a share with high-volume. Look for volume on a sustained move or close above those levels that hits near or above its three-month average action of 719,884 shares. If that breakout triggers soon, then JVA will have a good chance of filling some of a recent gap-down back towards $9 a share. If that gap gets filled, then JVA could easily spike back above its 50-day moving average of $9.07 a share and possibly hit $10 or its 200-day moving average of $10.33 a share.

If you’re bullish on JVA, then one could anticipate the breakout and look to buy this stock off any noticeable weakness. I would use a mental stop at around $7.50 to $7.25 a share in case JVA isn’t ready to rip to the upside here. Look to add to any long positions once JVA takes out its 50-day at $9.07 with high volume, and then above some past overhead resistance at $9.65 to $9.91 a share with volume.

Nautilus

An under-$10 name in the recreational products complex that’s trading within range of a major breakout trade is Nautilus (NLS), whose principal business activities include designing, developing, sourcing and marketing cardiovascular and fitness products and related accessories for consumer home use, primarily in the U.S. and Canada. This stock is off to a monster start in 2012 with shares up over 70%.

 

If you take a look at the chart for Nautilus you’ll see that this stock has been uptrending strong for the last six months, with shares soaring from a low of $1.50 to a recent high of $3.10 a share. During that move, shares of Nautilus have been making mostly higher lows and higher highs, which is bullish technical price action. This stock did experience a selloff recently back below its 50-day moving average of $2.66 a share, but it has since then recovered and is now flirting with a major breakout trade.

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Market players should now look for long-biased trades in NLS if it can manage to trigger a breakout above some near-term overhead resistance levels at $3.04 to $3.10 a share with high-volume. Look for a sustained move or close above those levels on volume that’s near or well above its three-month average action of 252,808 shares. On Thursday, NLS hit an intraday high of $3.10 on above average volume of 325,935 shares.

If you buy this stock off of weakness and anticipate further upside, then I would simply use a stop near the 50-day moving average of $2.66 a share. I would rather play this name off of strength though since that a breakout above $3.10 will push NLS into new 52-week high territory. Some potential targets on the upside if NLS can maintain a trend above $3.04 to $3.10 with strong upside volume flows are its next significantly overhead resistance levels at$3.45 to $3.68, and possibly even $4.40 a share.

Gevo

Another under-$10 name that’ trading within range of a major breakout trade is Gevo (GEVO), a renewable chemicals and advanced biofuels company. Gevo is focused on the development and commercialization of alternatives to petroleum-based products. This stock is off to a slow start in 2012, with shares up just 4.8%.

If you take a look at the chart for Gevo, you’ll notice that this stock has been destroyed by the sellers, with shares dropping from its May high of $10.25 to a recent low of $4.84 a share. That monster move lower happened rapidly since Gevo lost over 40% in value in just a few weeks, after the stock sliced through its 50-day and 200-day moving averages. That said, the stock has started to find some near-term buying interest off its recent lows of $4.84 to $5.30 a share.

Shares of Gevo briefly broke out on Thursday above some near-term overhead resistance at $6.09 with heavy volume. The stock hit an intraday high of $6.39 and volume was 297,800 shares, which was well above its three-month average action of 167,689 shares.

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Market players should now look for long-biased trades in GEVO if it can manage to trigger break out above some near-term overhead resistance at $6.37 a share with high-volume. Look for volume off a sustained move or close above $6.37 that registers near or above its three-month average action of 167,689 shares.

If we get that high-volume move above $6.37 a share, then GEVO could easily spike higher towards its 200-day moving average of $7.96 or even its 50-day moving average of $8.24 a share. If you buy this stock off of weakness to anticipate the breakout, then I would use a mental stop around $5.30 a share. If you buy off strength on a high-volume move over $6.37, then I would use a stop at around $6.09 a share, which was the previous breakout level.

Keep in mind that GEVO will only have a chance of hitting those targets if it’s trending above $6.37 with strong upside volume flows.

ImmunoCellular

One more under-$10 name that’s already started to enter breakout territory is ImmunoCellular (IMUC), which seeks to develop and commercialize new therapeutics to fight cancer using the immune system. This stock is off to a slow start in 2012, with shares up by around 6.6%.

If you take a look at the chart for ImmunoCellular, you’ll notice this stock has been uptrending very strong for the past six months, with shares skyrocketing from a low of 98 cents to a recent high of $4.00 a share. During that monster move higher, shares of ImmunoCellular have mostly made higher lows and higher highs, which is bullish technical price action. This stock recently moved back below its 50-day moving average of $2.84 and then hit $2.05 before rising again breaking out above $3.02 a share. Now shares of IMUC have started to trigger another breakout above $3.40 a share on monster volume.

Volume on Thursday registered 1,914,500 shares, which was well above its three-month average volume of 476,958 shares. The stock hit an intraday high of $4.00 a share, which was also a new 52-week high. That move came after news broke that ImmunoCellular’s cancer vaccine candidate showed positive Phase 1 results.

Traders should now look for long-biased trades in IMUC if it can manage to sustain its uptrend above $3.25 to $4.00 a share with strong upside volume flows. Look for a sustained move or close above those levels on volume that’s near or above its three-month average action of 476,958 shares. If we get that action, then look for IMUC to continue its uptrend towards $5 to $6 a share in the near future.

Keep in mind that IMUC would still be in a bullish uptrend even if it pulled back towards $3.02 a share, or even near its 50-day moving average of $2.84 a share. That said, I would rather see this stock continue to trend above $3.25 to $4 a share to confirm that it wants to move higher. That would keep the stock within its breakout range and simply raise the probability of higher prices in the near future.

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 Winderemere, Fla.

 

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

Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.