Thursday, April 17, 2014

2 Oversold Stocks Ready to Bounce Higher

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Set to Soar on Bullish Earnings

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

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.

>>5 Rocket Stocks for a Tumbling Market

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

Himax Technologies

Himax Technologies (HIMX) designs, develops and markets semiconductors for flat panel displays. This stock closed up 3.5% to $9.32 a share in Tuesday's trading session.

Tuesday's Range: $8.61-$9.37

52-Week Range: $4.76-$16.15

Tuesday's Volume: 12.97 million

Three-Month Average Volume: 7.79 million

From a technical perspective, HIMX trended higher here right above some longer-term support at $8.13 with strong upside volume. This stock has been downtrending badly for the last month, with shares moving lower from its high of $16.08 to its intraday low of $8.61. During that downtrend, shares of HIMX have been consistently making lower highs and lower lows, which is bearish technical price action. That downtrend has now pushed shares of HIMX into oversold territory, since its current relative strength index reading is 28.53. Oversold can always get more oversold, but since HIMX trended up on Tuesday with strong volume, this stock how has a good chance to bounce higher.

Traders should now look for long-biased trades in HIMX as long as it's trending above Tuesday's low of $8.61 and then once it sustains a move or close above Tuesday's high of $9.37 with volume that hits near or above 7.79 million shares. If that move gets underway soon, then HIMX could easily bounce sharply higher back towards its 200-day moving average of $10.50 to $11.50.

BlackBerry

BlackBerry (BBRY) provides wireless communications solutions worldwide. This stock closed up 0.98% to $7.21 in Tuesday's trading session.

Tuesday's Range: $7.05-$7.28

52-Week Range: $5.44-$16.59

Tuesday's Volume: 10.59 million

Three-Month Average Volume: 24.19 million

From a technical perspective, BBRY bounced modestly higher here right above some near-term support at $7.01 with lighter-than-average volume. This stock recently formed a longer-term double bottom chart pattern $6.98 to $7.01. Following that bottom, shares of BBRY have started to uptick a bit higher off oversold levels, since its current relative strength index reading is 26.07. Oversold can always get more oversold, but it's also an area where a stock can make a sharp bounce higher from.

Traders should now look for long-biased trades in BBRY as long as it's trending above those double bottom support levels and then once it sustains a move or close above Tuesday's high of $7.28 with volume that hits near or above 24.19 million shares. If that move gets started soon, then BBRY will set up to re-test or possibly take out its next major overhead resistance levels at $8 to its 200-day moving average of $8.65 or its 50-day moving average of $9.16.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher 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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