DELAFIELD, Wis. (Stockpickr) -- Not a day goes by on Wall Street without certain stocks that trade for $10 a share or less experiencing 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 big movers in the under-$10 complex from Thursday, including QLT (QLTI), which is ripping higher by 16%; OHR Pharma (OHRP), which is jumping higher by 14%; UniPixel (UNXL), which is soaring higher by 13%; and ParkerVision (PRKR), which is trending higher by 10%. 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 biotech stock that recently exploded to the upside was Northwest Biotherapeutics (NWBO), which I highlighted in June 12's "5 Stocks Under $10 Set to Soar Higher" at around $6.70 a share. I mentioned in that piece that shares of Northwest Biotherapeutics had been uptrending over the last month, with the stock moving higher from its low of $4.87 to its recent high at that time of $6.80 a share. That uptrend started right off NWBO's 200-day moving and the stock was just starting to spike higher off its 50-day moving average. That spike was quickly pushing shares of NWBO within range of triggering a near-term breakout trade above some key overhead resistance levels at $6.72 to $6.80 a share.
Guess what happened? Shares of Northwest Biotherapeutics started to trigger that breakout the same day as my piece with heavy upside volume. Volume on that day registered 2.14 million shares, which is well above its three-month average action of 1.09 million shares. Shares of NWBO continued to explode higher for the following three trading sessions in a row, with the stock tagging an intraday high of $9.35 a share on June 17. That represents a monster gain of close to 40% in just a few days for anyone who bought into that breakout. As you can see, trading small-cap stocks with the right technical setup can produce massive profits very quickly once momentum buyers take over.
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.
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.
Onconova Therapeutics
One under-$10 clinical-state biopharmaceutical player that's starting to move within range of triggering a big breakout trade is Onconova Therapeutics (ONTX), which focuses on discovering and developing small molecule drug candidates to treat cancer. This stock has been destroyed by the short-sellers so far in 2014, with shares off sharply by 56%.
If you glance at the chart for Onconova Therapeutics, you'll notice that this stock has been trending sideways and consolidating right below its 50-day moving average for the last few weeks. This consolidation pattern is occurring right after shares of ONTX recently spiked sharply higher from its low of $4.10 to its high of $5.52 a share. Shares of ONTX are now trending within range of breaking out of that consolidation pattern and potentially heading higher.
Traders should now look for long-biased trades in ONTX if it manages to break out above its 50-day moving average of $5.09 a share and then once it takes out some more key overhead resistance levels at $5.24 to $5.52 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 203,756 shares. If that breakout triggers soon, then ONTX will set up to re-test or possibly take out its next major overhead resistance levels at $6.27 to $7 a share.
Traders can look to buy ONTX off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $4.75 to right around $4.50 a share. One can also buy ONTX 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.
Turtle Beach
Another under-$10 stock that's starting to trend within range of triggering a big breakout trade is Turtle Beach (HEAR), which is engaged in developing, commercializing and marketing audio technologies under the Turtle Beach and HyperSound brands in the U.S., Europe and internationally. This stock has been hit hard by the sellers so far in 2014, with shares off sharply by 29%.
If you take a look at the chart for Turtle Beach, you'll notice that this stock recently formed a triple bottom chart pattern at $9, $9.04 and $9.28 a share. Since forming that bottom, shares of HEAR have started to spike higher back above its 50-day moving average of $9.75 a share. That spike is quickly pushing shares of HEAR within range of triggering a near-term breakout trade.
Market players should now look for long-biased trades in HEAR if it manages to break out above some near-term overhead resistance at $10.08 to $10.50 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 of 195,008 shares. If that breakout gets underway soon, then HEAR will set up to re-test or possibly take out its next major overhead resistance levels at $11 to $11.40 a share. Any high-volume move above $11.40 will then give HEAR a chance to re-fill some of its previous gap-down-day zone from April that started near $13.50 a share.
Traders can look to buy HEAR off weakness to anticipate that breakout and simply use a stop that sits right below those triple bottom support levels. One can also buy HEAR 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.
SouFun
One under-$10 Internet information player that's starting to move within range of triggering a big breakout trade is SouFun (SFUN), which operates a real estate Internet portal as well as a home furnishing and an improvement Web site in the People's Republic of China. This stock has been hammered lower by the sellers so far in 2014, with shares down huge by 42%.
If you take a glance at the chart for SouFun, you'll see that this stock has been downtrending badly for the last four months, with shares falling from its high of $19.94 to its recent low of $8.52 a share. During that downtrend, shares of SFUN have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of SFUN have started to reverse its downtrend and enter a new uptrend, with the stock moving higher from that $8.52 low to it recent high of $9.58 a share. Shares of SFUN are now spiking higher today right above some near-term support at $9 a share, and it's quickly moving within range of triggering a big breakout trade.
Traders should now look for long-biased trades in SFUN if it manages to break out above some near-term overhead resistance levels at $9.58 to $10 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 7.73 million shares. If that breakout kicks off soon, then SFUN will set up to re-test or possibly take out its next major overhead resistance levels at $11 to its 50-day moving average of $11.36 a share. Any high-volume move above those levels will then give SFUN a chance to tag $12 to $13 a share.
Traders can look to buy SFUN off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $9 to $8.82 a share, or even that recent low of $8.52 a share. One can also buy SFUN off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Prana Biotechnology
Another under-$10 biotechnology player that's starting to trend within range of triggering a major breakout trade is Prana Biotechnology (PRAN), which researches and develops therapeutic drugs for the treatment of neurological disorders in Australia. This stock has been crushed by the bears so far in 2014, with shares off huge by 69%.
If you look at the chart for Prana Biotechnology, you'll notice that this stock recently formed a double bottom chart pattern at $1.90 to $2 a share right above its 50-day moving average of $1.84 a share. Shares of PRAN have been consolidating and moving sideways above its 50-day for the last few weeks. This stock is now starting to spike higher today right above those near-term support levels, and it's quickly pushing within range of triggering a major breakout trade above some key overhead resistance levels.
Market players should now look for long-biased trades in PRAN if it manages to break out above some near-term overhead resistance levels at $2.22 to $2.35 a share and then above some past overhead resistance at $2.47 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 1.98 million shares. If that breakout triggers soon, then PRAN will set up to re-test or possibly take out its gap-down-day high from April at $3.24 a share. Any high-volume move above that level will then give PRAN a chance to re-fill some of its previous gap-down-day zone that started at $10.30 a share.
Traders can look to buy PRAN off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day moving average of $1.84 a share. One can also buy PRAN 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.
KaloBios Pharmaceuticals
One final under-$10 biopharmaceuticals player that looks ready to trigger a big breakout trade is KaloBios Pharmaceuticals (KBIO), which primarily develops monoclonal antibody therapeutics for the treatment of respiratory diseases and cancer in the U.S. This stock has been rocked by the sellers so far in 2014, with shares down sharply by 49%.
If you take a glance at the chart for KaloBios Pharmaceuticals, you'll notice that this stock recently formed a double bottom chart pattern at $1.69 to $1.66 a share. Since tagging that bottom, shares of KBIO have started to uptrend and move back above its 50-day moving average of $2.07 a share. Shares of KBIO are now starting to uptick a bit today right above its 50-day, and it's beginning to move within range of triggering a big breakout trade.
Traders should now look for long-biased trades in KBIO if it manages to break out above some near-term overhead resistance levels at $2.34 to $2.35 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 224,478 shares. If that breakout begins soon, then KBIO will set up re-test or possibly take out its next major overhead resistance levels at $2.66 to $3 a share. Any high-volume move above those levels will then give KBIO a chance to tag its next major overhead resistance levels at $3.28 to $3.69 a share. Keep in mind that a large gap sits right above $3.69 that could also get tested on a move above that level.
Traders can look to buy KBIO off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support around $2 a share. One can also buy KBIO off strength once it starts to trade above 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.
RELATED LINKS:
>>3 Stocks Spiking on Big Volume
>>5 Stocks Under $10 Poised to Pop in June
>>5 Stocks Set to Soar on Bullish Earnings
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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.
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