Stock Quotes in this Article: BCRX, DRWI, NEPT, PSDV, AXDX

MADISON, 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.

Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including James River Coal (JRCC), which skyrocketed higher by 29%; Brightcove (BCOV), which ripped higher by 24.7%; Synacor (SYNC), which surged by 21.9%; and MediciNova (MNOV), which spiked up by 21.9%. 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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One low-priced stock that recently broke out and soared higher is biopharmaceutical player Raptor Pharmaceuticals (RPTP), which I highlighted in March 7's “5 Stocks Under $10 Set to Soar” at around $5.30 a share. I mentioned in that piece that RPTP was just starting to trend back above its 200-day moving average with strong upside volume flows. That move was quickly pushing the stock within range of triggering a breakout trade above some near-term overhead resistance levels at $5.29 to $5.56 a share and above its 50-day moving average.

Guess what happened? Shares of RPTP went on to trigger that breakout as the stock cleared its 50-day moving average and never looked back from that level. Shares of RPTP continued on its uptrend with the stock soaring to its recent high of $7.67 a share, which it hit earlier this week. What was great about this play is that as RPTP broke out the stock never broke its uptrend or its 50-day moving average. That move registered a large gain in a very short timeframe of about two months for anyone who played the breakout.

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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.

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.

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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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Biocryst Pharmaceuticals

One under-$10 stock that’s trending very close to trigger a near-term breakout trade is Biocryst Pharmaceuticals (BCRX), a biotechnology company that designs, optimizes and develops novel drugs that block key enzymes involved in cancer, viral infections and autoimmune diseases. This stock has been in play with the bulls so far in 2013, with shares up 38%.

If you take a look at the chart for Biocryst Pharmaceuticals, you’ll notice that this stock has been uptrending for the last month, with shares moving higher from its low of $1.62 to its recent high of $2.09 a share. During that uptrend, shares of BCRX have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BCRX within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in BCRX if it manages to break out above some near-term overhead resistance levels at $2.09 to $2.21 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 action of 1.34 million shares. If that breakout triggers soon, then BCRX will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day of $2.55 a share to $2.88 a share. Any high-volume move above $2.88 will then put $3.25 to $4 into range for shares of BCRX.

Traders can look to buy BCRX off weakness to anticipate that breakout and simply use a stop that sits just below some near-term support levels at $1.85 to $1.70 a share. One can also buy BCRX off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below $1.85 a share.

This stock has a decent amount of bears involved in the name, since the current short interest as a percentage of the float for BCRX is pretty high at 11.8%. We could easily see a large short-squeeze if BCRX breaks out soon, so make sure to put this name on your breakout trading radar.

Make note that Biocryst Pharmaceuticals is set to report earnings next week Tuesday before the market opens. Traders can look to play this breakout ahead of the quarter, or after the quarter, but holding through always holds addition risks.

pSivida

Another under-$10 stock that’s starting to move into range of triggering a major breakout trade is pSivida (PSDV), which develops tiny, sustained-release, drug delivery products designed to deliver drugs at a controlled and steady rate for months or years. This stock has been crazy hot in 2013, with shares up a whopping 100%.

If you take a look at the chart for pSivida, you’ll notice that this stock has been trending sideways in a consolidation pattern for the last two months, with shares moving between $1.95 on the downside and around $2.50 on the upside. Shares of PSDV have just started to bounce off its 50-day moving average at $2.20 a share, and that move is quickly pushing the stock within range of triggering a major breakout trade above the upper end of its recent range.

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Market players should now look for long-biased trades in PSDV if it manages to break out above some near-term overhead resistance levels at $2.40 to $2.50 a share and then once it clears more resistance at $2.58 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 123,697 shares. If that breakout hits soon, then PSDV will set up to re-test or possibly take out its next major overhead resistance levels at $3.50 to $4 a share.

Traders can look to buy PSDV off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $2.20 a share or around some key support at $2.12 to $2.09 a share. One can also buy PSDV off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below $2.20 a share.

Accelerate Diagnostics

Another under-$10 name that’s trending within range of triggering a near-term breakout trade is Accelerate Diagnostics (AXDX), which develops the BACcel system, planned for rapid diagnosis in life-threatening bacterial infections. It has also developed and out-licensed OptiChem surface coatings for use in microarraying components. This stock has been on fire so far in 2013, with shares up sharply by 62%.

If you take a look at the chart for Accelerate Diagnostics, you’ll notice that this stock has started to come out of its recent downtrending pattern, with shares spiking higher off its low of $4.80 a share to its recent high of $6.77 a share. That bounce has moved shares of AXDX back above its 50-day moving average at $6.08 a share and it’s now quickly moving within range of triggering a near-term breakout trade.

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Traders should now look for long-biased trades in AXDX if it manages to break out above some near-term overhead resistance levels at $6.77 to $7.38 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 62,100 shares. If that breakout triggers soon, then AXDX will set up to re-test or possibly take out its 52-week high at $8.99 a share. Any high-volume move above $8.99 a share could then easily push AXDX towards $10.

Traders can look to buy AXDX off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $6.08 a share or right below some key near-term support at $5.86 a share. One can also buy AXDX off strength once it clears those breakout levels with volume and then simply use a stop that sits right below its 50-day at $6.08 a share.

Neptune Technologies & Bioressources

Another under-$10 name that’s quickly moving within range of triggering a major breakout trade is Neptune Technologies & Bioressources (NEPT), which researches, develops and commercialises worldwide, natural marine-derived health products with clinically proven human health benefits. This stock is off to a hot start in 2013, with shares up notably by 35%.

If you take a look at the chart for Neptune Technologies & Bioressources, you’ll notice that this stock has been trending sideways in a consolidation pattern for the last four months, with shares moving between $2.30 on the downside and $2.95 on the upside. Shares of NPET have just started to bounce right off its 50-day moving average of $2.56 and it’s now quickly moving within range of breaking out above the upper end of its sideways chart pattern.

Market players should now look for long-biased trades in NEPT if it manages to break out above some near-term overhead resistance levels at $2.75 to $2.95 a share and then once it clears more resistance at $3.03 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 action of 221,979 shares. If that breakout triggers soon, then NEPT will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day of $3.29 to around $4 a share. Any high-volume move above $4 could then send NEPT towards its next major resistance levels at $4.75 to $5 a share.

Traders can look to buy NEPT off weakness to anticipate that breakout and simply use a stop that sits just its 50-day at $2.56 a share or below some more key near-term support levels at $2.40 to $2.30 a share. One can also buy NEPT off strength once it clears those breakout levels with volume and then simply use a stop just below its 50-day at $2.56 a share.

Dragon Wave

One more under-$10 name that looks poised to trigger a near-term breakout trade is Dragon Wave (DRWI), which is a producer of high-capacity packet microwave solutions which transmit voice, video and data over broadband connections. This stock has been hit by the sellers so far in 2013, with shares off by 32%.

If you take a look at the chart for Dragon Wave, you’ll notice that this stock has been uptrending strong for the last two months, with shares moving higher from its low of $1.37 to its intraday high of $2.25 a share. During that uptrend, shares of DRWI have been mostly making higher lows and higher highs, which is bullish technical price action. That move is quickly pushing shares of DRWI within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in DRWI if it manages to break out its 200-day moving average at $2.26 a share and then once it clears more resistance levels at $2.47 to $2.49 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 204,966 shares. If that breakout triggers soon, then DRWI will set up to re-test or possibly take out its next major overhead resistance levels at $3.20 to $3.70 a share.

Traders can look to buy DRWI off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day at $1.82 a share. One can also buy off strength once DRWI clears those breakout levels with volume and then simply use a stop right below its 200-day at $2.26 a share or below $2.10 a share.

Keep in mind that this company is set to report earnings next Wednesday after the market close. You can trade this breakout if it triggers prior to the quarter and after the quarter, but holding through earnings always holds additional risk.

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 Madison, Wis.

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

Roberto Pedone, based out of Madison, 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.