5 Stocks Under $10 Set to Soar

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.

Just take a look at some of the hot movers in the under-$10 complex from Wednesday, including Intellicheck Mobilisa (IDN), which skyrocketed higher by 76.5%; CardioNet (BEAT), which soared higher by 38.2%; Homex Development (HXM), which spiked higher by 29.1%; and Samson Oil & Gas (SSN), which jumped higher by 25.2%. 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 exploded higher was biotechnology player Idera Pharmaceuticals (IDRA), which I highlighted in June 20's "5 Stocks Under $10 Set to Soar" at 74 cents per share. I mentioned in that piece that shares of IDRA had been trading in a tight consolidation chart pattern, with the stock trending between 60 cents on the downside and 83 cents on the upside. This stock was just starting to bounce right off its 50-day moving average at 68 cents per share. That bounce was quickly pushing shares of IDRA within range of triggering a major breakout trade above its 200-day moving average at 76 cents per share and above some key resistance levels at 82 to 83 cents per share.

Guess what happened? Shares of IDRA pulled back following my piece to a low of 62 cents per share, and since hitting that low the stock never looked back. In mid-July IDRA hit a high of 86 cents per share as the stock started to move into breakout territory. Then on last Friday IDRA ripped to the upside with heavy volume and as the stock tagged $1 a share. On Monday of this week, IDRA exploded higher again with monster upside volume as the stock hit an intraday high of $1.73 a share. That massive move represents a gain of over 100% since I flagged this stock at 74 cents per share. As you can see, discovering and trading stocks that break out can lead to massive gains in a very short timeframe.

Shares of IDRA still look poised for higher prices, but I wouldn't get long unless it breaks out again above $1.50 to $1.73 a share with high volume. We could easily see a run north of $2 to $2.20 a share if that breakout hits, so keep this name on your breakout trading radar.

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.

Novavax

One under-$10 biopharmaceutical player that's currently trending within range of triggering a major breakout trade is Novavax (NVAX), which is engaged in creating differentiated, value- upon current preventive options for various infectious diseases. This stock is off to a strong start in 2013, with shares up around 40%.

If you take a look at the chart for Novavax, you'll notice that this stock has been uptrending strong for the last two months, with shares soaring higher from its low of $1.68 to its recent high of $2.78 a share. During that uptrend, shares of NVAX have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of NVAX are now starting to move within range of triggering a major breakout trade accompanied by strong upside volume flows.

Traders should now look for long-biased trades in NVAX if it manages to break out above some key overhead resistance levels at its 52-week high of $2.78 to $3 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 1.56 million shares. If that breakout triggers soon, then NVAX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $3.50 to $4 a share, or possibly even $4.50 a share.

Traders can look to buy NVAX off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $2.35 a share, or right below its 50-day at $2.22 a share. One can also buy NVAX off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Tetraphase Pharmaceuticals

Another under-$10 biopharmaceutical player that's starting to trend within range of triggering a near-term breakout trade is Tetraphase Pharmaceuticals (TTPH), which using its proprietary chemistry technology creates novel antibiotics for serious and life-threatening multi-drug resistant infections. This stock is off to a strong start in 2013, with shares up 19.4%.

If you take a look at the chart for Tetraphase Pharmaceuticals, you'll notice that this stock has just started to trend back above its 50-day moving average of $7.76 a share with decent upside volume flows. That move is quickly pushing shares of TTPH within range of breaking out above some key near-term overhead resistance levels that have acted as a ceiling for the stock for the last three months.

Market players should now look for long-biased trades in TTPH if it manages to break out above some near-term overhead resistance levels at $8.30 to $8.40 a share and then once it takes out more resistance at $8.50 to $9 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 62,234 shares. If that breakout triggers soon, then TTPH will set up to re-test or possibly take out its all-time high at $9.66 a share. Any high-volume move above that level will then push TTPH into new all-time high territory, which is bullish technical price action. Some possible upside targets off that move are $12 to $13 a share.

Traders can look to buy TTPH off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $7.76 a share, or below more key near-term support levels at $7.37 to $7.02 a share. One can also buy TTPH off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Avalon Rare Metals

One under-$10 rare earth metals player that's trending very close to triggering a major breakout trade is Avalon Rare Metals (AVL), which is a Canadian mineral exploration and development stage company with its focus on the rare metals and minerals. This stock has been hit hard by the bears so far in 2013, with shares off by 40%.

If you take a look at the chart for Avalon Rare Metals, you'll notice that this stock recently pulled back after a monster run to the upside, with shares selling off from its high of 90 cents to its low of 71 cents per share. Shares of AVL are now starting to bounce off that low and trend back above its 50-day moving average at 74 cents per share. That move is quickly pushing this stock within range of triggering a major breakout trade above a key descending trendline and above some near-term overhead resistance levels.

Traders should now look for long-biased trades in AVL if it manages to break out above some near-term overhead resistance levels at 82 to 90 cents per 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 447,084 shares. If that breakout triggers soon, then AVL will set up to re-test or possibly take out its next major overhead resistance levels at $1.14 to $1.22 a share. Any high-volume move above those levels will then put its next major overhead resistance levels at 41.34 to $1.64 within range for shares of AVL.

Traders can look to buy AVL off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at 71 cents to 65 cents per share. One can also buy AVL off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Synacor

Another under-$10 stock that's starting to trend within range of triggering a major breakout trade is Synacor (SYNC), a provider of startpages, TV Everywhere solutions, Identity Management services and various cloud-based services across multiple devices for cable, satellite, telecom and consumer electronics companies. This stock has been hammered by the bears so far in 2013, with shares off by 39%.

If you take a look at the chart for Synacor, you'll notice that this stock recently formed a double bottom chart pattern at $2.85 to $2.96 a share. Following that bottom, shares of SYNC have started to surge higher and move back above its 50-day moving average at $3.27 a share. That move is quickly pushing SYNC within range of triggering a major breakout trade.

Market players should now look for long-biased trades in SYNC if it manages to break out above some near-term overhead resistance levels at $3.43 to $3.56 a share and then once it takes out more resistance at $4 to $4.17 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 388,369 shares. If that breakout triggers soon, then SYNC will set up to re-test or possibly take out its next major overhead resistance levels at $6 to $6.50 a share.

Traders can look to buy SYNC off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $2.96 to $2.85 a share. One can also buy SYNC off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

CombiMatrix

One final under-$10 name that looks ready to trigger a big breakout trade is CombiMatrix (CBMX), a molecular diagnostics company that operates mainly in the field of genetic analysis and molecular diagnostics. This stock has been hit hard by the shorts so far in 2013, with shares off by 33%.

CombiMatrix announced some positive news today that it will be teaming up with Sequenom (SQNM) in a collaboration agreement to market chromosomal microarray analysis testing services to broaden and confirm the results of noninvasive, prenatal testing to physicians and their patients.

If you take a look at the chart for CombiMatrix, you'll notice that this stock is gapping up sharply higher today right above its 50-day moving average of $3.07 a share with strong upside volume. This stock has been uptrending strong over the last month, with shares moving higher from its low of $2.82 to its recent high of $3.84 a share. Today's spike is quickly pushing shares of CBMX within range of triggering a big breakout trade.

Traders should now look for long-biased trades in CBMX if it manages to break out above some near-term overhead resistance levels at its 200-day moving average of $3.78 a share and then above more resistance at $3.84 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 413,270 shares. If that breakout triggers soon, then CBMX will set up to re-test or possibly take out its next major overhead resistance levels at $4.60 to $5 a share. Any high-volume move above those levels will then put its next major overhead resistance levels at $7.64 to $8 within range for shares of CBMX.

Traders can look to buy CBMX off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $3.07 a share or below some more key near-term support at $2.82 a share. One can also buy CBMX off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Keep in mind that shares of CBMX are very popular among the bears, since the current short interest as a percentage of the float for this stock is very high at 11.7%. If that breakout triggers soon, then we could easily get a monster short-squeeze, so make sure to put this name on your trading radar.

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.