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.

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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.

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

Walter Energy

Walter Energy (WLT) produces and exports metallurgical coal for the steel industry. This stock closed up 1.1% to $5.09 in Thursday's trading session.

Thursday's Range: $4.90-$5.35
52-Week Range: $4.90-$19.50
Thursday's Volume: 4.99 million
Three-Month Average Volume: 5.96 million

From a technical perspective, WLT bounced modestly higher here right off its new 52-week low of $4.90 with decent upside volume. This stock has been downtrending badly for the last five months, with shares plunging lower from over $17 to its recent 52-week low of $4.90. During that move, shares of WLT have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of WLT have now entered oversold territory, since its relative strength index reading is 23.12. 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 WLT as long as it's trending above its 52-week low of $4.90 and then once it sustains a move or close above Thursday's intraday high of $5.35 with volume that hits near or above 5.96 million shares. If we get that move soon, then WLT will set up to re-test or possibly take out its next major overhead resistance levels at $6 to $6.50, or even its 50-day moving average at $7.16.

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