One under-$10 stock that could be poised for a powerful bounce higher is Exelixis ( EXEL), a biotechnology company engaged in developing small molecule therapies for the treatment of cancer. Exelixis is focusing its resources and development efforts on cabozantinib (XL184). This stock has been hit hard by the bears during the last six months, with shares off by 20%.

If you take a look at the chart for Exelixis, you'll notice that this stock was hammered by the sellers during the last few trading sessions, with shares plunging from $6.95 to a recent low of $4.27 a share. That selloff came with monster volume, and during the move shares of EXEL never once flashed a buy signal since it was clearly downtrending.

That said, the stock has now entered oversold territory since its relative strength index reading is trending below 30. Shares of EXEL have also now dropped down near some previous support levels at $4.40 to $4 a share.

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Just this morning, huge upside volume is moving into EXEL with over 31 million shares traded versus its three-month average volume of 1.8 million shares. At last check, EXEL is up 5.2% off that monster upside volume. That huge volume is due to a secondary offering that price 30 million shares at $4.25.

Traders should now look for long-biased trades in EXEL if it can manage to hold a trend above $4.40 to $4 a share with strong upside volume flows. I would consider any upside volume day that registers near or above 1.88 million shares as bullish. If EXEL continues to see buyers step in here and support that price above $4 a share, then we could easily see this stock make a huge bounce. Some upside targets off an oversold bounce are $5.50 to $6 a share.

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