Stock Quotes in this Article: AFFX, BVSN, LEAP, NVTL, PTIE

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 Paragon Shipping (PGRN), which skyrocketed by 21.1%; Canadian Solar (CSIQ), which soared by 18.1%; and Suntech Power (STP), which ripped higher by 12.6%. 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 went bananas to the upside was Peregrine Pharmaceuticals (PPHM), which I highlighted in Jan. 04's “5 Stocks Poised for Breakouts” at around $1.40 a share. I mentioned in that piece that shares of PPHM were starting to bounce off its 200-day moving average of $1.21 and it was quickly moving within range of triggering a breakout above the upper-end of its recent sideways trading pattern. I also mentioned that if PPHM triggered that breakout, then the stock would have a great chance of getting into its previous gap down zone from last September that started at $5.50 a share.

Guess what happened? Shares of PPHM triggered that breakout the next trading session with massive upside volume. Had you bought the stock in anticipation of that breakout on last Friday, then you banked some serious coin in just a few trading sessions. Shares of PPHM went on to hit a high of $2.78 a share on Tuesday, before selling off back to its recent low of $2 a share. If PPHM is going to see any more upside in the near future, then it will need to take out $2.78 a share with high volume.

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.

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With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels.

Pain Therapeutics

One under-$10 stock that's trending very close to triggering a major breakout trade is Pain Therapeutics (PTIE), which is a biopharmaceutical company that develops novel drugs. This stock has been trashed by the sellers during the last three months, with shares dropping 50%.

If you take a look at the chart for Pain Therapeutics, you'll see that this stock has been uptrending strongly for the last two months, with shares moving higher from its low of $2.06 to its recent high of $2.89 a share. During that uptrend, shares of PTIE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PTIE within range of triggering a major breakout trade.

Traders should now look for long-biased trades in PTIE if it manages to break out above some near-term overhead resistance levels at $2.89 a share to its 200-day moving average of $3.05 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 238,910 shares. If that breakout triggers soon, then PTIE will set up to re-test or possibly take out its next major overhead resistance levels at $3.80 to $4.48 a share.

Traders can look to buy PTIE off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $2.40 to $2.34 a share. One could also just buy off strength once PTIE clears those breakout levels with volume and then simply use the same stop that sits right around its 50-day moving average of $2.47 a share.

Novatel Wireless

Another under-$10 stock that's moving within range of triggering a major breakout trade is Novatel Wireless (NVTL), which is a provider of wireless broadband access solutions for the worldwide mobile communications market. This stock has been hammered by the bears during the last six months, with shares down by 43%.

If you take a look at the chart for Novatel Wireless, you'll notice that this stock has been uptrending for the last month and change, with shares moving higher from its low of $1.17 to its recent high of $1.50 a share. During that uptrend, shares of NVTL have been mostly making higher lows and higher highs, which is bullish technical price action. Shares of NVTL have now started to trend back above its 50-day moving average of $1.39 with decent upside volume. That move is quickly pushing NVTL within range of triggering a major breakout trade.

Market players should now look for long-biased trades in NVTL if it manages to break out above some near-term overhead resistance levels at $1.45 to $1.50 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 356,243 shares. If that breakout hits soon, then NVTL will set up to re-test or possibly take out its next major overhead resistance levels at $1.80 to $1.86 a share. Any high-volume move above those levels will then put $2 to $2.09 into range for shares of NVTL.

Traders can look to buy NVTL off any weakness to anticipate that breakout and then simply use a stop that sits right around some key near-term support levels at $1.29 to $1.24 a share. One can also buy off strength once NVTL clears those breakout levels with volume and then simply use a stop that sits just below its 50-day moving average of $1.39 a share.

Affymetrix

One under-$10 name that's trending very close to triggering a near-term breakout trade is Affymetrix (AFFX), which is engaged in developing, manufacturing and selling products and services for genetic analysis to the life science research and clinical healthcare markets. This stock has been trending lower for the last six months, with shares off by 19.8%.

If you take a look at the chart for Affymetrix, you'll notice that this stock has been trending sideways for the last three months, with shares moving between $3.72 on the upside and $2.96 on the downside. That sideways trading pattern came after the stock gapped down with big volume last October from around $4.50 a share. Shares of AFFX have recently started to trend back above its 50-day moving average of $3.26 a share and it's quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in AFFX if it manages to break out above some near-term overhead resistance levels at $3.62 to $3.72 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 681,000 shares. If that breakout hits soon, then AFFX will set up to re-fill its previous gap down zone from last October that started near $4.50 a share. Any high-volume move above $4.50 to $4.61 would then put $4.80 to $5.20 within range for shares of AFFX.

Traders can look to buy AFFX off any weakness to anticipate that breakout and then simply use a stop that sits just below its 50-day moving average of $3.26 a share. One could also buy AFFX off strength once it clears those breakout levels with volume and then simply use a stop that sits just below $3.40 a share.

BroadVision

Another under-$10 name that's trending very close to triggering a near-term breakout trade is BroadVision (BVSN), which develops, markets, and supports enterprise portal applications that enable companies to unify their e-business infrastructure and conduct both interactions and transactions with employees, partners and customers. This stock has been rising during the past three months, with shares moving higher by 13.3%.

If you take a look at the chart for BroadVision, you'll see that this stock has been trending sideways for the last month and change, with shares moving between $8.25 on the downside and $9.52 on the upside. This trend has been occurring just above the stock's 50-day moving average of $8.55 a share. Shares of BVSN are now just starting to break out above $9.52 a share with above-average volume.

Market players should now look for long-biased trades in BVSN if it manages to break out above some near-term overhead resistance levels at $9.52 to $10.46 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 61,531 shares. If that breakout triggers soon, then BVSN will set up to re-test or possibly take out its next major overhead resistance levels at $11.50 to $11.96 a share. Any high-volume move above those levels could then send BVSN towards its next major overhead resistance level at $13.19 a share.

Traders can look to buy BVSN off any weakness and then simply use a stop that sits just below its 50-day moving average of $8.55 a share. One could also buy BVSN off strength once it takes out those breakout levels with volume and then simply use a stop that sits just below $9 a share.

Leap Wireless

One final under-$10 name that's trending very close to triggering a near-term trade is Leap Wireless (LEAP), which is a wireless communications carrier that offers digital wireless services in the United States of America under the Cricket brand. This stock has been uptrending for the last three months, with shares moving higher by 12.3%.

If you take a look at the chart for Leap Wireless, you'll notice that this stock has just started to bounce strongly right off its 50-day moving average of $6.27 and its 200-day moving average of $6.21 a share. This bounce is quickly pushing the stock within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in LEAP if it manages to break out above some near-term overhead resistance at $7.02 to $7.18 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 1,871,530 shares. If that breakout triggers soon, then LEAP will set up to re-test or possibly take out its next major overhead resistance levels at $7.75 to $8.16 a share. Any high-volume move above those levels will then put $8.50 to $8.75 into focus for shares of LEAP.

Traders can look to buy LEAP off any weakness to anticipate that breakout and simply use a stop that sits just below its 200-day moving average of $6.21 a share or near some support at $6 a share. One could also buy LEAP off strength once it clears those breakout levels with volume and then simply use a stop that sits just below its 50-day at $6.27 a share.

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.