Stock Quotes in this Article: ARQL, CYTR, GERN, XOMA, 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 Atossa Genetics (ATOS), which is exploding higher by 76%; Royale Energy (ROYL), which is soaring higher by 30%; Lucas Energy (LEI), which is trending to the upside by 25%; and Helios and Matheson Analytics (HMNY), which is ripping higher by 23%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.

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 potentially trade higher from current levels.

ArQule


One under-$10 biotechnology player that's starting to trend within range of triggering a near-term breakout trade is ArQule (ARQL), which researches and develops cancer therapeutics. This stock has been hit hard so far in 2014, with shares down sharply by 32%.

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If you glance at the chart for ArQule, you'll notice that this stock this stock has been downtrending badly for the last four months, with shares moving lower from its high of $2.92 to its recent 52-week low of $1.38 a share. During that downtrend, shares of ARQL have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of ARQL have now started to rebound off that $1.38 low and it's now starting to move within range of triggering near-term breakout trade.

Traders should now look for long-biased trades in ARQL if it manages to break out above some near-term overhead resistance at $1.55 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average action of 340,469 shares. If that breakout hits soon, then ARQL will set up to re-test or possibly take out its next major overhead resistance levels at $1.66 to its 50-day moving average of $1.77 a share. Any high-volume move above those levels will then give ARQL a chance to tag its next major overhead resistance levels at $2 to $2.20 a share.

Traders can look to buy ARQL off weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $5.97 a share. One can also buy ADMP 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.

Geron


Another under-$10 biotechnology player that's starting to spike within range of triggering a major breakout trade is Geron (GERN), which develops a telomerase inhibitor, imetelstat, to treat hematologic myeloid malignancies. This stock has been slammed lower by the bears so far in 2014, with shares off sharply by 55%.

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If you take a look at the chart for Geron, you'll notice that this stock is spiking sharply higher today right off its 50-day moving average of $1.98 a share. Shares of GERN have been trending sideways and consolidating for the last two months, with shares moving between $1.69 on the downside and $2.53 on the upside. This spike higher today in GERN is starting to push shares within range of triggering a major breakout trade above the upper-end of its recent sideways trending chart pattern.

Market players should now look for long-biased trades in GERN if it manages to break out above some near-term overhead resistance levels at $2.14 to $2.29 a share and then once it takes out more key overhead resistance at $2.53 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 5.49 million shares. If that breakout hits soon, then GERN will set up to re-fill some of its previous gap-down-day zone from March that started above $4.50 a share.

Traders can look to buy GERN off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $1.98 or around some more key near-term support levels at $1.81 to $1.69 a share. One can also buy GERN 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.

CytRx


One under-$10 biotechnology player that's starting to trend within range of triggering a big breakout trade is CytRx (CYTR), which operates as a biopharmaceutical research and development company specializing in oncology. This stock has been hit hard by the bears so far in 2014, with shares off sharply by 43%.

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If you take a glance at the chart for CytRx, you'll see that this stock has been uptrending over the last month and change, with shares moving higher from its low of $2.78 to its recent high of $3.68 a share. During that uptrend, shares of CYTR have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of CYTR are spiking higher today right off its 50-day moving average and that move is quickly pushing shares of CYTR within range of triggering a big breakout trade.

Traders should now look for long-biased trades in CYTR if it manages to break out above some near-term overhead resistance at $3.68 a share and then once it takes out its 200-day moving average of $3.86 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 2.21 million shares. If that breakout materializes soon, then CYTR will set up to re-test or possibly take out its next major overhead resistance levels at $4.64 to $5, or even $5.50 a share.

Traders can look to buy CYTR off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $3.42 to $3.23 a share, or even $3.05 a share. One can also buy CYTR 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.

ServiceSource International


Another under-$10 technology player that's starting to trend within range of triggering a major breakout trade is ServiceSource International (SREV), which provides recurring revenue management, maintenance, support and subscription for technology and technology-enabled health care and life sciences companies. This stock has been destroyed by the sellers so far in 2014, with shares down sharply by 49%.

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If you look at the chart for ServiceSource International, you'll see that this stock recently gapped down sharply from over $6 a share to $3.99 a share with heavy downside volume. Following that move, shares of SREV have now formed a double bottom chart pattern at $3.99 to $3.95 a share. This stock is now starting to spike higher off those double bottom support zones and it's quickly moving within range of triggering a major breakout trade above some key overhead resistance levels.

Market players should now look for long-biased trades in SREV if it manages to break out above some key near-term overhead resistance at $4.38 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.19 million shares. If that breakout gets underway soon, then SREV will set up to re-test or possibly take out its gap-down-day high of around $5 a share. Any high-volume move above $4.38 to $5 a share will then give SREV a chance to re-fill some of that previous gap-down-day zone that started above $6 a share.

Traders can look to buy SREV off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.99 to $3.95 a share. One can also buy SREV 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.

Xoma


One final under-$10 biotechnology player that's starting to trend within range of triggering a big breakout trade is Xoma (XOMA), which discovers and develops antibody-based therapeutics in the U.S., Europe and the Asia Pacific. This stock has been destroyed by the sellers so far in 2014, with shares down by well over 50%.

If you take a glance at the chart for XOMA, you'll notice that this stock has been downtrending badly for the last three months, with shares plunging lower from its high of $9.57 to its recent low of $3.42 a share. During that downtrend, shares of XOMA have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of XOMA have now formed a double bottom chart pattern at $3.42 to $3.47 a share. Following that bottom, shares of XOMA have now started to rebound higher and it's quickly moving within range of triggering a big breakout trade.

Traders should now look for long-biased trades in XOMA if it manages to break out above some near-term overhead resistance at $4 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 2.64 million shares. If that breakout hits soon, then XOMA will set up re-test or possibly take out its next major overhead resistance levels $4.69 to $4.85 a share. Any high-volume move above those levels will then give XOMA a chance to tag its 200-day moving average of $5.45 a share to possible even $6 to $6.50 a share.

Traders can look to buy XOMA off weakness to anticipate that breakout and simply use a stop that sits right around those double bottom support levels at $3.47 to $3.42 a share. One can also buy XOMA 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.

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.