DELAFIELD, Wis. (Stockpickr) -- A smart trader keeps a close eye on unusual upside volume in stocks -- and unusual volume in a stock that trades below $10 should really make you sit up and pay attention.
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Stocks that trade below $10 a share can make big moves to the upside very quickly, and short-term traders can try to capture some of that massive volatility. Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits.
If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.
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With that in mind, let's take a closer look at a several stocks under $10 that are making sharp moves higher with unusual upside volume flows.
Pacific Biosciences of California
Pacific Biosciences of California (PACB) develops, manufactures and markets an integrated platform for genetic analysis. This stock is trading up 8% to $7.05 in Tuesday's trading session.
Tuesday's Range: $6.51-$7.17
52-Week Range: $1.95-$8.20
Tuesday's Volume: 1.22 million
Three-Month Average Volume: 891,153
From a technical perspective, PACB is soaring higher here right above some near-term support at $6.18 with above-average volume. This move is quickly pushing shares of PACB within range of triggering a major breakout trade. That trade will hit if PACB manages to take out some near-term overhead resistance levels at $7.45 to $7.59 and then once it clears its 52-week high at $8.20 with high volume.
Traders should now look for long-biased trades in PACB as long as it's trending above Tuesday's low of $6.50 or above more support at $6.18 and then once it sustains a move or close above those breakout levels with volume that hits near or above 891,153 shares. If that breakout hits soon, then PACB will set up to enter new 52-week-high territory above $8.20, which is bullish technical price action. Some possible upside targets off that breakout are $10 to $11.
China Pharma
China Pharma (CPHI) develops, manufactures and markets generic and branded pharmaceutical and biochemical products to hospitals and private retailers in the People's Republic of China. This stock is trading up 8% to 56 cents per share in Tuesday's trading session.
Tuesday's Range: $0.50-$0.56
52-Week Range: $0.19-$0.80
Tuesday's Volume: 365,000
Three-Month Average Volume: 221,247
From a technical perspective, CPHI is ripping higher here and breaking out above some near-term overhead resistance at 53 cents per share with above-average volume. This move is quickly pushing shares of CPHI within range of triggering another big breakout trade. That trade will hit if CPHI manages to take out some more near-term overhead resistance levels at 60 to 64 cents per share with high volume.
Traders should now look for long-biased trades in CPHI as long as it's trending above some near-term support levels at 50 cents to 48 cents per share and then once it sustains a move or close above those breakout levels with volume that hits near or above 221,247 shares. If that breakout triggers soon, then CPHI will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of 80 cents per share.
Xencor
Xencor (XNCR), a clinical-stage biopharmaceutical company, focuses on discovering and developing engineered monoclonal antibodies to treat severe and life-threatening diseases. This stock is trading up 8% to $9.62 in Tuesday's trading session.
Tuesday's Range: $9.00-$9.94
52-Week Range: $7.70-$10.90
Tuesday's Volume: 144,000
Three-Month Average Volume: 83,279
From a technical perspective, XNCR is ripping higher here right off its 50-day moving average of $8.96 with above-average volume. This stock has been trending sideways the last month, with shares moving between $8.40 on the downside and $9.74 on the upside. Shares of XNCR are now quickly moving within range of triggering a near-term breakout trade above the upper-end of its recent range. That trade will hit if XNCR manages to take out some near-term overhead resistance levels at $9.74 to $10.20 with high volume.
Traders should now look for long-biased trades in XNCR as long as it's trending above its 50-day at $8.96 and then once it sustains a move or close above those breakout levels with volume that hits near or above 83,279 shares. If that breakout hits soon, then XNCR will set up to re-test or possibly take out its all-time high at $10.90.
Discovery Laboratories
Discovery Laboratories (DSCO), a specialty biotechnology company, focuses on developing products for critical care patients with respiratory disease and care in pulmonary medicine. This stock is trading up 4% to $2.36 in Tuesday's trading session.
Tuesday's Range: $2.28-$2.40
52-Week Range: $1.50-$3.05
Tuesday's Volume: 593,000
Three-Month Average Volume: 494,948
From a technical perspective, DSCO is trending higher here right off its 50-day moving average of $2.29 with above-average volume. This move is starting to push shares of DSCO into breakout territory, since this stock has started to trend above some near-term overhead resistance at $2.34. Shares of DSCO are now quickly moving within range of triggering an even bigger breakout trade. That trade will hit if DSCO manages to take out some key near-term overhead resistance levels at $2.57 to $2.64 with high volume.
Traders should now look for long-biased trades in DSCO as long as it's trending above some near-term support levels at $2.16 to $2.10 and then once it sustains a move or close above those breakout levels with volume that hits near or above 494,948 shares. If that breakout hits soon, then DSCO will set up to re-test or possibly take out its 52-week high at $3.05.
To see more stocks under $10 that are making notable moves higher with volume, check out the Stocks Under $10 Spiking Higher With Unusual Volume 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.
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