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TheStreet Open House

2 Oversold Stocks Ready to Bounce Higher

Frontline

Frontline (FRO) is engaged in the ownership and operation of oil tankers and oil/bulk/ore carriers. This stock closed up 4.3% to $2.42 a share in Thursday's trading session.

Thursday's Range: $2.32-$2.44
52-Week Range: $1.77-$5.18
Thursday's Volume: 915,000
Three-Month Average Volume: 985,974

From a technical perspective, FRO ripped higher here right above its recent low of $2.23 with decent upside volume. This stock has been downtrending badly for the last three months, with shares moving lower from its high of $4.63 to its recent low of $2.23. During that downtrend, shares of FRO have been consistently making lower highs and lower lows, which is bearish technical price action. That move has now pushed shares of FRO into oversold territory, since its current relative strength index reading is 28.8. Oversold can always get more oversold, but it's also an area from which a stock can make a powerful bounce higher.

Traders should now look for long-biased trades in FRO as long as it's trending above that recent low of $2.23 and then once it sustains a move or close above Thursday's intraday high of $2.44 with volume that hits near or above 985,974 shares. If that move gets underway soon, then FRO will set up to re-test or possibly take out its next major overhead resistance levels near $2.75 to $3, or even its 200-day moving average at $3.28.

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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