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.

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Just take a look at some of the big movers in the under-$10 complex from Thursday, including Rexahn Pharmaceuticals (RNN), which is exploding higher by 19%; Synthetic Biologics (SYN), which is jumping higher by 17%; Skilled Healthcare Group (SKH), which is trending to the upside by 12%; and Ambient (AMBT), which is ripping higher by 12%. 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 ripped higher was integrated mining player Pretium Resources (PVG), which I highlighted in April 24's "5 Stocks Under $10 Set to Soar" at around $6 per share. I mentioned in that piece that shares of PVG were trending sideways and consolidating for the last three months or so, with the stock moving between $5 on the downside and $7.49 on the upside. This stock was just starting to spike higher above support at $5.50 and it's was quickly moving within range of triggering a near-term breakout trade above its 200-day at $6.21 and its 50-day at $6.32 a share.

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Guess what happened? Shares of Pretium Resources triggered that breakout a few trading sessions later. This stock ran sharply once those key moving averages were taken out with decent volume, and shares of PVG tagged a recent a high of $7.70 a share. That represents a very nice gain in a tough market environment of right around 30%.

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.

Adamis Pharmaceuticals

One under-$10 biopharmaceutical player that's starting to trend within range of triggering a near-term breakout trade is Adamis Pharmaceuticals (ADMP), which is engaged in the development and commercialization of specialty pharmaceutical and biotechnology products in the therapeutic areas of respiratory disease, allergies, oncology and immunology. This stock is off to a decent start in 2014, with shares up 6.5%.

If you glance at the chart for Adamis Pharmaceuticals, you'll notice that this stock has been uptrending for the last month and change, with shares moving higher from its low of $4.66 to its intraday high of $6.99 a share. During that uptrend, shares of ADMP have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of ADMP have recently crossed back above both its 50-day and 200-day moving averages. That move has now pushed shares of ADMP within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in ADMP if it manages to break out above some near-term overhead resistance levels at $6.90 to $7.25 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 159,259 shares. If that breakout triggers soon, then ADMP will set up to re-test or possibly take out its next major overhead resistance levels at $9 to $10 a share.

Traders can look to buy ADMP 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.

Charles & Colvard

An under-$10 jewelry player that's starting to push within range of triggering a big breakout trade is Charles & Colvard (CTHR), which manufactures, markets and distributes moissanite jewels and finished jewelry featuring moissanite worldwide. This stock has been destroyed by the sellers so far in 2014, with shares off by 52%.

If you take a look at the chart for Charles & Colvard, you'll notice that this stock has been downtrending badly for the last six months, with shares sliding lower from around $6 to its recent 52-week low of $1.87 a share. During that move, shares of CTHR have making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of CTHR have started to rebound higher off that $1.87 low and it's now moving within range of triggering a big breakout trade above some key near-term overhead resistance levels.

Market players should now look for long-biased trades in CTHR if it manages to break out above some near-term overhead resistance levels at $2.49 to $2.52 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 148,820 shares. If that breakout kicks off soon, then CTHR will set up to re-test or possibly take out its next major overhead resistance levels at $2.75 to its 50-day moving average of $2.92 a share. Any high-volume move above those levels will then give CTHR a chance to tag $3.25 to $3.50 a share.

Traders can look to buy CTHR off weakness to anticipate that breakout and simply use a stop that sits right around $2.15 or at $2 a share. One can also buy CTHR 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.

Gordmans Stores

One under-$10 apparel stores player that's starting to move within range of triggering a near-term breakout trade is Gordmans Stores (GMAN), which operates department stores under the Gordmans name in the U.S. Its merchandise selection includes a range of apparel, footwear and home fashions products, as well as accessories. This stock has been hit hard by the bears so far in 2014, with shares down sharply by 38%.

If you take a glance at the chart for Gordmans Stores, you'll notice that this stock recently formed a triple bottom chart pattern at $4.31, $4.33 and $4.43 a share. This bottom is coming after shares of GMAN downtrended badly over the last six months, with the stock falling from over $10 to its recent low of $4.31 a share. Shares of GMAN are now starting to bounce higher off those near-term support levels and it's quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in GMAN if it manages to break out above some near-term overhead resistance levels at $5.02 to $5.03 a share and then once it takes out its 50-day moving average of $5.16 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 86,113 shares. If that breakout materializes soon, then GMAN will set up to re-test or possibly take out its next major overhead resistance levels at $5.55 to around $6.50 a share.

Traders can look to buy GMAN off weakness to anticipate that breakout and simply use a stop that sits right below $4.43 or $4.31 a share. One can also buy GMAN off strength once it starts to push above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Actuate

Another under-$10 technology player that's starting to trend within range of triggering a major breakout trade is Actuate (BIRT), which provides software solutions and services to corporate and government customers worldwide. This stock has been under the control of the sellers so far in 2014, with shares off by 47%.

If you look at the chart for Actuate, you'll see that this stock recently gapped down sharply from over $5.50 to its 52-week low of $3.41 a share with heavy downside volume. Following that move, shares of BIRT have started to rebound off that $3.41 low and it's now moving within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Market players should now look for long-biased trades in BIRT if it manages to break out above some key near-term overhead resistance levels at $4.03 a share to its gap-down-day high of $4.10 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 509,657 shares. If that breakout starts soon, then BIRT will set up to re-fill some of its previous gap-down-day zone from earlier this month that started at $5.50 a share.

Traders can look to buy BIRT off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support around $3.77 a share. One can also buy BIRT 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.

Elbit Imaging

One final under-$10 real estate player that's starting to trend within range of triggering a big breakout trade is Elbit Imaging (EMITF), which is engaged in commercial and entertainment centers, hotels, medical, residential projects and fashion apparel businesses in Israel, Western Europe, Central and Eastern Europe and internationally. This stock has been destroyed by the sellers so far in 2014, with shares down big by 83%.

If you take a glance at the chart for EMITF, you'll notice that this stock recently formed a double bottom chart pattern at 16 cents to 17 cents per share. Following that bottom, shares of EMITF have now started to bounce off those support levels and it's quickly moving within range of triggering a big breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in EMITF if it manages to break out above some near-term overhead resistance levels at its 50-day moving average of 21 cents per share to some more key resistance at 24 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 1.15 million shares. If that breakout hits soon, then EMITF will set up re-test or possibly take out its next major overhead resistance levels at 28 cents to 30 cents per share. Any high-volume move above those levels will then give EMITF a chance to make a run into its previous gap-down-day zone from February that started at 90 cents per share.

Traders can look to buy EMITF off weakness to anticipate that breakout and simply use a stop that sits right around those double bottom support zones at 17 to 16 cents per share. One can also buy EMITF 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.