Stock Quotes in this Article: MCHX, SBSA, SKYW, DATE, ASTX

WINDERMERE, Fla. (Stockpickr) -- There isn’t a day that goes by on Wall Street when certain 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 from Thursday, including Microvision (MVIS), which skyrocketed higher by 28%; EntreMed (ENMD), which soared 24%; Patriot Coal (PCX), which ripped to the upside by 22%; and James River Coal (JRCC), which closed up 15.6%. 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.

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Spanish Broadcasting System

One under-$10 name that looks poised for higher prices is broadcasting player Spanish Broadcasting System (SBSA), a Hispanic-controlled media and entertainment company in the U.S. The company operates in two segments: radio and television. This stock is off to a very hot start in 2012, with shares up over 45%.

If you take a look at the chart for Spanish Broadcasting System, you’ll notice that this stock was smashed by the bears in mid-May, with shares falling from a high of $7.50 to a recent low of $2.78 a share. It only took about two weeks for this stock to drop that significantly. Following that plunge, shares of SBSA have started to uptrend off that $2.78 low, with shares now making higher lows and higher highs, which is bullish technical price action. That move has now pushed SBSA back above its 50-day moving average of $4.40 a share.

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Market players should now look for long-biased trades in SBSA as long as this stock is trending above its 50-day moving average of $4.40 a share with strong upside volume flows. I would consider any upside volume days that register near or above its three-month average action of 112,519 shares as bullish. If we continue to see that action, then SBSA could easily hit $6 to $7.50 in the near future.

If you like the look of SBSA here, then one could buy this stock into strength as long as it’s maintaining a trend above its 50-day with strong volume. You can use a stop a few percentage points below the 50-day in case SBSA isn’t ready to hold that trend. You could also buy off weakness below the 50-day with a stop near today’s low of $3.89 a share, but that would be much more risky.

Jiayuan.com International

Another under-$10 stock in the personal services complex that’s setting up to trend higher is Jiayuan.com International (DATE), an online dating platform in China. This stock is off to a weak start in 2012, with shares off by around 17%.

If you take a look at the chart for Jiayuan.com International, you’ll see that this stock has been downtrending hard for most of the year, with shares dropping from close to $8 a share to a recent low of $3.60 a share. During that sharp move lower, shares of Jiayuan.com International have been making lower highs and lower lows, which is bearish technical price action. That said, the stock has now rebounded off that $3.60 low and started to trend higher to sideways. That move has pushed DATE within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in DATE if it can manage to trigger a breakout trade above some near-term overhead resistance at $5.02 a share with high-volume. Look for volume on a sustained move or close above $5.02 that registers near or above its three-month average action of 70,694 shares. If we get that action soon, then DATE will have little resistance until $5.45 to $6.00 a share. Any high-volume move over $6 could mean DATE is ready to fill a previous gap-down that takes this stock back towards $7.25 to $7.50 a share.

If you’re in the bull camp on DATE, then one could anticipate the breakout and look to buy this stock off weakness and simply use a stop that’s a few percentage points below its 50-day moving average of $4.77 a share. You could even go all the way down to $4.55 a share, since that’s where the stock has found big-time buying interest during the past month. One could also just get long off strength once DATE takes out $5.02 with high-volume. I would still use a stop around the 50-day if you buy off strength.

Astex Pharmaceuticals

Another under-$10 name that looks ready to break out here is drug developer Astex Pharmaceuticals (ASTX), which engages in the discovery and development of small molecule therapeutics with a focus on oncology and hematology. This stock is off to a decent start in 2012, with shares up around 12%.

If you take a look at the chart for Astex Pharmaceuticals, you’ll notice that this stock recently formed a double bottom chart pattern at around $1.57 to $1.58 a share in May. After making that bottom, shares of Astex Pharmaceuticals have started to uptrend strong, with shares mostly making higher lows ad higher highs, which is bullish technical price action. That move has pushed ASTX within range of triggering a major breakout trade.

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Traders should now look for long-biased trades in ASTX if it can manage to trigger a break out trade above some near-term overhead resistance at $2.17 a share, and then above some past resistance at $2.20 a share with high-volume. Look for a sustained move or close above those levels on volume that’s near or above its three-month average action of 380,606 shares. If we get that action soon, then ASTX could have some major upside towards $2.95 a share, or possibly higher. That move will likely happen if ASTX moves into its previous gap-down above $2.60 a share.

One could be a buyer of ASTX off weakness to anticipate the breakout, and simply use a stop right below some major near-term support at $2 a share. You could even put the stock right below its 50-day moving average of $1.82 a share if you want to give it more room. One could also just buy off strength and get long above $2.17 to $2.20 once those levels are taken out with high-volume. I would simply use a stop a few percentage points below those levels if you get long off strength.

SkyWest

One under-$10 name in the airline complex that’s setting up to trend higher is SkyWest (SKYW), which, through its subsidiaries, operates a regional airline in the U.S. It also provides ground handling services for other airlines throughout its system. This stock is off to a bearish start in 2012, with shares down by over 40%.

If you take a look at the chart for SkyWest, you’ll see that the bears have done a number on this stock during the last six months, with shares plunging from over $13 a share to a recent low of $6.25 a share. During that massive move lower, shares of SkyWest have consistently made lower highs and lower lows, which is bearish technical price action. That said, SKYW has now started to trend sideways for the past month between $6.25 to $7.10 a share. In fact, SKYW has started to show a double bottom pattern at around $6.25 to $6.34 a share, and the stock looks posed to trigger a near-term breakout trade.

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Traders should now look for long-biased trades in SKYW if it can manage to trigger a break out above some near-term overhead resistance at $7.10 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 497,329 shares. If we get that action soon, then SKYW will have a great chance of re-test and possibly taking out its 50-day moving average of $7.45 a share, and some overhead resistance at $7.57 a share. If SKY were to take out those levels with strong volume, then this stock could easily skyrocket toward $8.50 to $9.50 a share, or possibly much higher.

If you’re bullish on SKYW, then one could buy off weakness and simply use a stop right below that double bottom zone at $6.34 to $6.25 a share. If you buy off weakness, then I would add to any long positions once SKYW takes out $7.10 and then $7.57 a share with high-volume. One could also just off strength once $7.10 is taken out with volume, and simply use a stop a few percentage points below that level.

Marchex

Another under-$10 name in the technology complex that’s trading very close to triggering a breakout trade is Marchex (MCHX), a digital call advertising and small business solutions company. The company offers products, services and technologies that enable advertisers to reach local consumers across online, mobile and offline sources. This stock has been hammered by the bears so far in 2012, with shares off by over 35%.

If you take a look at the chart for Marchex, you’ll notice that this stock has been stuck in range for the past two months, with shares trending between $3.12 on the downside and $3.60 to $3.68 on the upside. Shares of Marchex recently took out its 50-day moving average of $3.41 a share, and the stock has moved above that $3.60 to $3.68 resistance area. That move has now pushed MCHX within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in MCHX if it can manage to trigger a breakout above some near-term overhead resistance at $3.88 a share with high-volume. Look for volume off a sustained move or close above $3.88 that registers near or above its three-month average action of 153,421 shares. If we get that action soon, then MCHX could easily rip significantly higher towards $4.50 to $4.85 a share, or possibly envy its 200-day moving average of $5.29 a share.

One could buy MCHX off strength on a move over $3.88 with volume, and simply use a stop that’s a few percentage points below that $3.60 to $3.68 breakout level. You could also buy off weakness and simply use a stop just below its 50-day moving average of $3.41 a share. If you buy off weakness around the 50-day at $3.41, then look to add once $3.88 is taken out with volume.

Keep in mind that MCHX has great short-squeeze potential, since the current short interest as a percentage of the float is pretty high at 12.2%. This stock also has a relatively low float of just 17.37 million shares. This is the perfect combination for a big-time short-squeeze if that breakout 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 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.