Stock Quotes in this Article: ANR, DARA, DYAX, IGC, ONE, SREV

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 big movers in the under-$10 complex from Thursday, including Supertel Hospitality (SPPR), which exploded higher by 42%; Smith Micro Software (SMSI), which ripped to the upside by 26%; Kips Bay Medical (KIPS), which trended up by 22%; and Verso Paper (VRS), which jumped higher by 20%. 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's exploded the upside recently is ServiceSource International (SREV), which I highlighted on May 22 at around $4.25 per share. I mentioned in that piece that shares of ServiceSource International recently gapped down sharply from over $6 to $3.99 a share with heavy downside volume. Following that gap, shares of SREV formed a double bottom chart pattern at $3.99 to $3.95 a share. This stock was just starting to bounce higher off those double bottom support levels and it was quickly moving within range of triggering a major breakout trade above some key overhead resistance at $4.38 a share.

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Guess what happened? Shares of ServiceSource International triggered that breakout the following trading session with decent upside volume. This stock continued uptrend since triggering that breakout with shares of SREV tagging an intraday high on June 30 of $6.17 per share. That represents a huge gain of over 40% since the time of the original article. As you can see, trading small-cap stocks that trigger breakouts and catch momentum can deliver big profits in a very short timeframe.

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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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 trade higher from current levels.

Dara BioSciences


One under-$10 biopharmaceutical player that's starting to move within range of triggering a near-term breakout trade is Dara BioSciences (DARA), which develops and commercializes oncology treatment and supportive care pharmaceutical products in the U.S. This stock has been hammered by the sellers so far in 2014, with shares down big by 54%.

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If you take a glance at the chart for Dara BioSciences, you'll notice that this stock recently formed a major bottoming chart pattern at $1.13, $1.11 and $1.17 a share. Shares of DARA have been basing and consolidating for the last few weeks, with shares moving between $1.17 on the downside and $1.34 on the upside. A high-volume move above the upper-end of that recent range could trigger a big near-term breakout trade for shares of DARA.

Traders should now look for long-biased trades in DARA if it manages to break out above some near-term overhead resistance levels at $1.25 to $1.27 a share and then once it clears its 50-day moving average of $1.34 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 1.40 million shares. If that breakout triggers soon, then DARA will set up to re-test or possibly take out its next major overhead resistance level at $1.52 a share. Any high-volume move above that level and DARA could easily tag $2 to $2.38 a share.

Traders can look to buy DARA off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $1.17 to $1.11 a share. One can also buy DARA off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Higher One



Another under-$10 stock that's starting to trend within range of triggering a big breakout trade is Higher One (ONE), which provides technology-based refund disbursement, payment processing and data analytics services to higher education institutions and students in the U.S. This stock has been hit hard by the sellers so far in 2014, with shares off sharply by 59%.

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If you take a look at the chart for Higher One, you'll notice that this stock recently dropped sharply lower from its May high of around $6.50 to its recent low of $3.63 a share with heavy downside volume. Following that sharp drop, shares of ONE have started to base and consolidate with the stock moving between $3.47 on the downside and $4.07 on the upside. Shares of ONE are now starting to spike higher off the lower end of that base and it's quickly moving within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern.

Market players should now look for long-biased trades in ONE if it manages to break out above some key near-term overhead resistance levels at $4.04 to $4.07 a share and then once it clears its 50-day moving average of $4.39 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 396,864 shares. If that breakout gets underway soon, then ONE will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $5.50, or even $6 to $6.50 a share.

Traders can look to buy ONE off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.69 or at its 52-week low of $3.47 a share. One can also buy ONE off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

India Globalization Capital

One under-$10 basic materials player that's starting to move within range of triggering a major breakout trade is India Globalization Capital (IGC), which operates as a materials and infrastructure company in India and the People's Republic of China. This stock has been red hot over the last three months, with shares up sharply by 87%.

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If you take a glance at the chart for India Globalization Capital, you'll see that this stock has recently formed a double bottom chart pattern at $1.31 to $1.36 a share. This double bottom is forming right above IGC's 50-day moving average of $1.27 a share. Shares of IGC are now starting to spike higher above all of those support levels and it's quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in IGC if it manages to break out above Thursday's intraday high of $1.50 a share to more key near-term overhead resistance levels at $1.58 to just above $1.60 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 volume of 1.33 million shares. If that breakout materializes soon, then IGC will set up to re-test or possibly take out its next major overhead resistance levels at $1.99 to its 52-week high at $2.34 a share.

Traders can look to buy IGC off weakness to anticipate that breakout and simply use a stop that sits right above those double bottom support levels at $1.36 to $1.31 a share or above its 50-day at $1.27 a share. One can also buy IGC off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Dyax

Another under-$10 stock that's starting to jump higher and move within range of triggering a big breakout trade is Dyax (DYAX), which identifies, develops and commercializes treatments for hereditary angioedema and plasma kallikrein-mediated angioedemas. This stock has been on fire so far in 2014, with shares ripping higher by 30%.

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If you look at the chart for Dyax, you'll see that this stock has been uptrending strong for the last month and change, with shares moving higher from its low of $6.05 to its recent high of $10.07 a share. During that uptrend, shares of DYAX have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of DYAX are now starting to spike higher right off some near-term support at $9.50 a share. That spike is quickly pushing shares of DYAX within range of triggering a major breakout trade above some key overhead resistance levels.

Market players should now look for long-biased trades in DYAX if it manages to break out above some near-term overhead resistance at $10.07 a share and then once it takes out more resistance levels at $10.89 to its 52-week high at $10.99 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 1.46 million shares. If that breakout kicks off soon, then DYAX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $12 to $14 a share.

Traders can look to buy DYAX off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $9.50 a share or down near $8.50 a share. One can also buy DYAX off strength once it starts to move above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Alpha Natural Resources

One final under-$10 basic materials player that looks ready to trigger a big breakout trade is Alpha Natural Resources (ANR), which is engaged in extracting, processing and marketing thermal and metallurgical coal in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming. This stock has been destroyed by the short-sellers so far in 2014, with shares off big by 47%.

If you take a glance at the chart for Alpha Natural Resources, you'll notice that this stock has been uptrending a bit over the last month, with shares moving higher from its low of $3.10 to its recent high of $3.94 a share. During that uptrend, shares of ANR have been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend is coming after shares of ANR experienced a massive downtrend, with the stock dropping lower from its 2013 high of $10.74 to that recent low of $3.10 a share. Shares of ANR are now starting to spike higher right above some near-term support at $3.51 and it's quickly moving within range of triggering a big breakout trade.

Traders should now look for long-biased trades in ANR if it manages to break out above its 50-day moving average of $3.88 a share and then once it clears more key overhead resistance levels at $3.94 to $4 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 9.93 million shares. If that breakout triggers soon, then ANR will set up to re-test or possibly take out its next major overhead resistance levels at $4.50 to $4.75 a share, or even $5.08 to its 200-day moving average of $5.40 a share.

Traders can look to buy ANR off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $3.50 a share. One can also buy ANR off strength once it starts to clear 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.