Stock Quotes in this Article: AMSC, ARQL, RGDX, SB, ACW

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 Pacific Booker Minerals , which skyrocketed by 41%; THQ , which soared by 37%; Acura Pharmaceuticals , which ripped higher by 37%; and Inteliquent , which spiked higher by 28.84%. 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 exploded higher was BioMimetic Therapeutics (BMTI), which I highlighted in Nov. 13's “4 Big Volume Gainers Under $10” at around $4.05 a share. I mentioned that BMTI was trending higher right above some near-term support at $3.80 a share. That move was quickly pushing BMTI within range of triggering a breakout trade above some near-term overhead resistance levels at $4.13 to $4.19 a share.

Guess what happened? Shares of BMTI started to challenge those breakout levels within a few days after it hit a high of $4.24 a share. The stock briefly dipped down to $4.04 a share before closing at $4.15 a share on Nov.16. The following trading session on Nov. 19, shares of BMTI exploded to the upside and hit an intraday high of $7.41 a share with monster upside volume. I mentioned in the article that traders should look for long-biased trades in BMTI as long as it was trending above $3.86 a share. When trading breakouts, many times you have to anticipate the move. Had you done that with BMTI, you would have banked a huge gain in just a few days.

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.

Accuride

One under-$10 stock that's trending very close to triggering a near-term breakout trade is Accuride (ACW), which is a manufacturers & suppliers of commercial vehicle components in North America. This stock has been hammered by the bears so far in 2012, with shares off by a whopping 60%.

If you take a look at the chart for ACW, you'll notice that this stock had been downtrending badly from August to mid-November, with shares falling from a high of $6.24 to its recent low of $2.21 a share. During that downtrend, shares of ACW were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of ACW have now started to uptrend since hitting $2.21 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 ACW once it manages to break out above some near-term overhead resistance levels at $2.75 to $3.08 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 520,908 shares. If that breakout triggers soon, then ACW will set up to re-test or possibly take out its next significant overhead resistance levels at $3.27 to $4.50 a share.

Traders can look to buy ACW off weakness as long as it's trending above some near-term support at $2.40 a share and then simply use a stop just below that level. One could also buy off strength once ACW takes out $2.75 to $3.27 with volume and then use a stop that sits right below $2.60 a share.

Response Genetics

Another under-$10 stock that's setting up to trigger a breakout trade is Response Genetics (RGDX), which is engaged in the research and development of innovative clinical diagnostic tests for cancer based on its proprietary technologies. This stock has been uptrending very strong for the last three months, with shares up a whopping 61%.

If you take a look at the chart for Response Genetics, you'll notice that this stock is just starting to trend above its 50-day moving average of $1.20 a share and volume is spiking dramatically to the upside. This action is quickly pushing shares of RGDX within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in RGDX once it breaks out above some near-term overhead resistance levels at $1.29 to $1.45 a share, and then once it clears $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 action 32,260 shares. If that breakout triggers soon, then RGDX will set up to re-test or possibly take out its next significant overhead resistance levels at $2 to $2.40 a share.

Traders can look to buy RGDX off any weakness as long as it's trending above its 50-day moving average of $1.20 a share, or as long as it's trending above $1.10 a share. One can also buy off strength once RGDX takes out $1.29 to $1.45 a share with volume and then simply use a stop that sits near its 50-day at $1.20 a share. I would add to either position once RGDX clears $1.60 a share with volume.

Arqule

One under-$10 name that's trending very close to triggering a major breakout trade is Arqule (ARQL), which is a clinical-stage biotechnology company engaged in the research and development of innovative cancer therapeutics. This stock has been hit hard by the bears so far in 2012, with shares down by over 50%.

If you take a look at the chart for Arqule, you'll notice that this stock gapped down big in early October from $5 to $1.98 a share with massive downside volume. Following that move, shares of ARQL have entered a range bound trading pattern, with shares moving between $2.25 on the downside and $2.92 on the upside. Shares of ARQL are now starting to move within range of breaking out above the upper-end of its recent trading range.

Traders should now look for long-biased trades in ARQL once it manages to break out above some near-term overhead resistance levels at $2.76 to $2.92 a share, and then once it takes out its 50-day moving average of $3 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 1,221,220 shares. If that breakout triggers soon, then ARQL could make an explosive move and re-fill some of that previous gap down zone from October. Some upside targets are $4.50 to $5 a share and possible even its 200-day at $5.66 a share.

Traders can look to buy ARQL off any weakness and simply use a stop that sits right around some key near-term support at $2.25 a share. One could also buy ARQL off strength once it takes out those breakout levels with high volume and then simply use a stop that sits just below $2.53 a share.

American Superconductor

Another under-$10 name that's trading very close to triggering a near-term breakout trade is American Superconductor (AMSC), which is a provider of megawatt-scale solutions that lower the cost of wind power and enhance the performance of the power grid. This stock hasn't done much so far in 2012, with shares off by around 7%.

If you take a look at the chart for American Superconductor, you'll see that this stock has been downtrending badly for the last month, with shares dropping from a high of $4.07 to a recent low of $2.40 a share. During that downtrend, shares of AMSC have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AMSC have recently formed a double bottom at $2.40 to $2.44 a share and the stock is now moving within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in AMSC once it manages to take out some near-term overhead resistance levels at $2.86 to $3.00 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 312,411 shares. If that breakout triggers soon, then AMSC will set up to re-test or possibly take out its next significant overhead resistance levels at its 50-day of $3.49 or its 200-day at $3.94 a share.

Traders can look to buy AMSC off any weakness and then simply use a stop that sits right around $2.44 to $2.40 a share. One could also buy AMSC off strength once it clears those breakout levels with volume and then simply use a stop near $2.60 a share.

Safe Bulkers

One final under-$10 name that's trending very close to triggering a major breakout trade is Safe Bulkers (SB), which is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along worldwide shipping routes for some of the consumers of marine drybulk transportation services. This stock has been hit hard by the sellers so far in 2012, with shares off by 40%.

If you take a look at the chart for Safe Bulkers, you'll notice that this stock has been downtrending badly for the last month and change, with shares plunging from a high of $5.96 to a recent low of $3.23 a share. During that downtrend, shares of SB have been consistently making lower highs and lower lows, which is bearish technical price action. That move has also pushed the stock into extremely oversold territory, since its current relative strength index (RSI) reading is 25. That said, shares of SB have now started to stabilize at around $3.30 a share and it's moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in SB once it breaks out above some near-term overhead resistance levels at $3.62 to $3.81 a share with high volume. Look for a sustained move or close above those levels with volume that hits close to or above its three-month average action of 331,677 shares. If that breakout triggers soon, then SB will set up to re-test or possibly take out its next major overhead resistance levels at $4.25 to $5 a share. It's even possible for SB to hit its 50-day at $5.19 or $5.50 to $5.75 a share.

Traders can look to buy SB off any weakness and simply use a stop that sits right around some key near-term support at $3.34 to $3.23 a share. One could also buy SB off strength once it clears those breakout levels with volume and then simply use a stop right around $3.50 to $3.34 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.