Stock Quotes in this Article: JVA, PIP, PRTS, SIFY, GTAT

WINDERMERE, Fla. (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 First Security Group (FSGI), which surged by 15.4%; Globus Maritime (GLBS), which soared by 13.6%; Unilife (UNIS), which ripped higher by 12.8%; and China Gerui Advanced Materials Group (CHOP), which trended up by 10.2%. 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 recently ripped higher was Novatel Wireless (NVTL), which I highlighted in Jan. 10's “5 Under-$10 Stocks Primed to Rise in January” at around $1.40 a share. In that piece I mentioned that NVTL was uptrending recently and making higher lows and higher highs, which is bullish technical price action. I pointed out how NVTL was just starting to trend back above its 50-day moving average of $1.39 with decent upside volume. That move was quickly pushing the stock within range of triggering a breakout trade above some near-term overhead resistance levels at $1.45 to $1.50 a share.

Guess what happened? Shares of NVTL triggered that breakout on Wednesday with monster upside volume. The stock soared from $1.50 to $1.80 a share, which is a big gain for anyone who was simply prepared and traded that breakout once it triggered. What was great about this breakout is that the volume the day before was brisk as shares of NVTL tagged $1.55 a share and closed above its 50-day moving average. This was a clear sign of accumulation and you can see what happened on Wednesday when the stock exploded to the upside.

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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.

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.

GT Advanced Technologies

One under-$10 stock that’s trending very close to triggering a near-term breakout trade is GT Advanced Technologies (GTAT), which is a global provider of polysilicon production technology, crystalline ingot growth systems and related photovoltaic manufacturing services for the solar industry. This stock has been hammered by the sellers during the last three months, with shares down by 35%.

If you take a look at the chart for GT Advanced Technologies, you’ll notice that this stock has been downtrending badly for the last five months, with shares plunging from its high of $7.09 to its recent low of $2.82 a share. During that downtrend, shares of GTAT have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of GTAT have started to rebound off that $2.82 low and move back above its 50-day moving average of $3.33 a share. That move is quickly pushing GTAT within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in GTAT if it manages to break out above some near-term overhead resistance levels at $3.55 to $3.81 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 3,707,820 shares. If that breakout triggers soon, then GTAT will set up to re-test or possibly take out its next major overhead resistance levels at $4.97 to $5.27 a share. Any high-volume move above those levels will then put $6.25 to $7 into range for shares of GTAT.

Traders can look to buy GTAT off any weakness to anticipate that breakout and simply use a stop that sits right around some near-term support at $3.07 a share. One could also buy off strength once GTAT clears those breakout levels with volume and then simply use the same stop that sits right below its 50-day moving average of $3.34 a share.

Traders should also keep in mind that GTAT is a favorite target of the short sellers, since its current short interest as a percentage of its float is a whopping 30.2%. If that breakout triggers soon, then we could easily see an epic short-squeeze develop for GTAT.

Coffee Holding

Another under-$10 stock that’s trending within range of triggering a near-term breakout trade is Coffee Holding (JVA), which is an integrated wholesale coffee roaster and dealer in the U.S. This stock has been on fire during the last six months, with shares soaring by just over 44%.

If you take a look at the chart for Coffee Holding, you’ll notice that this stock has been uptrending modestly for the last two months and change, with shares moving higher from its low of $5.99 to its recent high of $8.19 a share. During that uptrend, shares of JVA have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of JVA within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in JVA if it manages to break out above some near-term overhead resistance level $8.13 to $8.96 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 157,452 shares. If that breakout hits soon, then JVA will set up to re-test or possibly take out its next major overhead resistance levels at $10 to $12 a share.

Traders can look to buy JVA off any weakness to anticipate that breakout and then simply use a stop that sits close to its 200-day moving average of $6.98 a share. One can also buy off strength once JVA takes out $8.13 a share with volume and then simply use a stop right around some near-term support at $7.50 a share. I would add to either position once JVA clears $8.96 a share with decent volume.

This stock is another favorite target of the short sellers, since its current short interest as a percentage of its float is 17.2%. Any breakout in the near future could easily set off a large short-squeeze in shares of JVA, so make sure to keep this name on your trading radar.

U.S. Auto Parts Network

One under-$10 name that’s trending very close to triggering a major breakout trade is U.S. Auto Parts Network (PRTS), which is a distributor of aftermarket auto parts and accessories. This stock has been destroyed the bears during the last six months, with shares off by a whopping 56%.

If you take a look at the chart for U.S. Auto Parts Networks, you’ll see that this stock has been trending sideways during the last two months, with shares moving between $1.71 on the downside and $2.06 on the upside. Shares of PRTS are just starting to spike higher today and move within range of its 50-day moving average of $1.96 a share. The stock is also starting to trend close to breaking out above the upper-end of its recent sideways trading pattern.

Traders should now look for long-biased trades in PRTS if it manages to break out above some near-term overhead resistance levels at $1.92 to $1.99 a share and then once it clears more resistance at $2 to $2.06 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 37,810 shares. If that breakout triggers soon, then PRTS will set up to re-test or possibly take out its next major overhead resistance levels at $2.50 to its 200-day moving average of $3.23 a share.

Traders can look to buy PRTS off any weakness to anticipate that breakout and then simply use a stop that sits just below some key near-term support at $1.71 a share. One could also buy PRTS off strength once it clears those breakout levels with volume and then simply use a stop that sits just below its 50-day moving average of $1.96 a share.

Sify Technologies

Another under-$10 name that’s trading close to triggering a near-term breakout trade is Sify Technologies (SIFY), which is an integrated Internet, network and electronic commerce services Company, offering end-to-end solutions with a range of services delivered over a common Internet backbone infrastructure. This stock has fallen notably during the last three months, with shares off by 14.9%.

If you take a look at the chart for Sify Technologies, you’ll see that this stock has been uptrending strongly for the last two months and change, with shares soaring from its low of $1.61 to its recent high of $2.47 a share. During that uptrend, shares of SIFTY have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SIFY within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in SIFY if it manages to break out above some near-term overhead resistance at $2.47 a share with high volume. Look for a sustained move or close above $2.47 a share with volume that registers near or above its three-month average action of 261,626 shares. If that breakout triggers soon, then SIFY will set up to re-test or possibly take out its next major overhead resistance levels at $3.10 to $3.45 a share.

Traders can look to buy SIFY off any weakness to anticipate that breakout and then simply use a stop that sits just below its 50-day moving average of $1.99 a share. One could also buy SIFY off strength once it takes out $2.47 a share with volume and then simply use a stop just below its 200-day moving average at $2.29 a share.

PharmAthene

One final under-$10 name that’s trending very close to triggering a near-term breakout trade is PharmAthene (PIP), which is engaged in the development and commercialization of medical countermeasures against biological and chemical weapons in the U.S. This stock has been in play for the bulls during the last three months, with shares up by 21.9%.

If you take a look at the chart for PharmAthene, you’ll notice that this stock recently bounced strongly right off its 50-day moving average of $1.14 a share with heavy upside volume. That move has now pushed shares of PIP within range of its 200-day moving average of $1.30 a share and within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in PIP if it manages to break out above some near-term overhead resistance levels at $1.30 to $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 200,720 shares. If that breakout triggers soon, then PIP will set up to re-test or possibly take out its next major overhead resistance levels at $1.47 to $1.59 a share. Any high-volume move above $1.59 will then put $1.70 to $1.84 into focus for shares of PIP. A run towards $2.10 is even possible, if this stock breaks out soon.

Traders can look to buy PIP off any weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $1.14 a share. One could also buy PIP off strength once it clears those breakout levels with volume and then simply use a stop that sits just below its 200-day moving average of $1.30 a share. I would add to either position once PIP clears $1.47 to $1.59 a share with volume.

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 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.