5 Stocks Under $10 Poised for Upside
On Thursday, shares of Frontline soared 7.5% to $6.75 after the stock bounced hard right near its 50-day moving average of $6.26 a share. What I liked about that move Thursday is that FRO has started to move back above its downtrend line, which could be indicating that the short-term trend is going to change from bearish to bullish.
Traders should now look for long-biased trades in FRO if it can manage to clear some near-term overhead resistance at $7.00 to $7.04 with high-volume. Look for a sustained move or close above those levels on volume that's near or well above its three-month average action of 2,799,250 shares. Volume on Thursday registered 2.03 million shares, which is pretty decent volume for that 7.5% spike higher. If that breakout does trigger soon, then look for FRO to make a run at $8 to possibly its recent high of $9.47 a share. I would simply avoid any long trades in FRO if it drops back below its 50-day moving average of $6.26 with heavy volume.
Keep in mind that FRO is a favorite target of short-sellers. The current short interest as a percentage of the float for FRO is an extremely high 22.4%. If the trend for FRO is about to switch over to bullish, then we could easily see a monster short-squeeze in the coming days or weeks.
To see more hot under-$10 equities, check out the Stocks Under-$10 Setting Up To Explode Higher portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.