5 Stocks Under $10 Setting Up to Trade Higher: Covisint and More
DELAFIELD, Wis. (Stockpickr) — There isn’t a day that goes by on Wall Street when certain stocks trading for under $10 a share 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 big movers in the under-$10 complex from Wednesday, including Seanergy Maritime (SHIP) , which exploded higher by 27%; Arca Biopharma (ABIO) , which ripped higher by 22%; VBI Vaccines (VBIV) , which jumped higher by 14.4%; and Skystar Bio-Pharmaceutical (SKBI) , which soared to the upside by 14.3%. 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.
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.
Another under-$10 security and protection services player that’s starting to trend within range of triggering a near-term breakout trade is Nxt-ID (NXTD) , which provides various biometric solutions. This stock has been hit very hard by the sellers in 2014, with shares down large by 40%.
If you take a look at the chart for Nxt-ID, you’ll see that this stock has been attempting to carve out a bottom here over the last month and change, with shares finding buying interest each time it’s pulled back to right around $2 a share. Shares of NXTD are now starting to rip higher right above those recent support levels and it’s beginning to flirt with its 50-day moving average of $2.50 a share. That move is quickly pushing shares of NXTD within range of triggering a near-term breakout trade above some key overhead resistance levels.
Market players should now look for long-biased trades in NXTD if it manages to break out above some near-term overhead resistance levels at $2.65 to $2.67 a share and then above $2.75 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 798,484 shares. If that breakout begins soon, then NXTD will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $3.48 to $3.70 a share, or even $4.20 a share.
Traders can look to buy NXTD off weakness to anticipate that breakout and simply use a stop that sits right below some major near-term support at $2 a share. One can also buy NXTD 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.