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5 Under-$10 Stocks Setting Up to Trade Higher

Tickers in this article: RGDX SB ARQL ACW AMSC
WINDERMERE, Fla. ( 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 hot movers in the under-$10 complex from Wednesday, including Pacific Booker Minerals (PBM) , which skyrocketed by 41%; THQ (THQI) , which soared by 37%; Acura Pharmaceuticals (ACUR) , which ripped higher by 37%; and Inteliquent (IQNT) , which spiked higher by 28.84%. 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 BioMimetic Therapeutics (BMTI) , which I highlighted in Nov. 13's " 4 Big Volume Gainers Under $10 " at around $4.05 a share. I mentioned that BMTI was trending higher right above some near-term support at $3.80 a share. That move was quickly pushing BMTI within range of triggering a breakout trade above some near-term overhead resistance levels at $4.13 to $4.19 a share.

Guess what happened? Shares of BMTI started to challenge those breakout levels within a few days after it hit a high of $4.24 a share. The stock briefly dipped down to $4.04 a share before closing at $4.15 a share on Nov.16. The following trading session on Nov. 19, shares of BMTI exploded to the upside and hit an intraday high of $7.41 a share with monster upside volume. I mentioned in the article that traders should look for long-biased trades in BMTI as long as it was trending above $3.86 a share. When trading breakouts, many times you have to anticipate the move. Had you done that with BMTI, you would have banked a huge gain in just a few days.

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.