Shares of Fair Isaac Corporation are trading a bit higher Thursday. This comes after the stock lost more than 23% of its value in just two days. Comments from Bill Pulte, director of the Federal Housing Finance Agency, caused the move lower. He expressed concerns over the company's decision to raise its wholesale royalty fees for credit scores.

The stock is now oversold and at a support level. These dynamics could lead to a reversal and a move higher, which is why our trading team has made it our Stock of the Day.

The red line on the chart is called a Bollinger Band. It is two standard deviations below the 20-day moving average.

According to statistics and probability theory, 95% of all trading should be within two standard deviations of the average. This means if a stock exceeds the band to the downside, it is considered to be oversold.

Read Also: Trump’s Big Tax Bill Clears The House: 30-Year Yields Jump To 5.15% As Bond Market Freaks

There is a good chance this draws buyers into the market.

They will be anticipating a reversion to the mean or a move higher. Their buying could act as a self-fulfilling prophecy and force the price up.

Fair Issac is also at a support level. As you can see on the chart, since September the stock has reached this support five times while being oversold. Each time was followed by a move higher.

Support is a price level where there is a large amount of buy interest. Sometimes, the traders and investors who created the support become concerned that other buyers will raise the prices they are willing to pay.

These concerned buyers know the sellers will go to whoever is willing to pay the highest price. As a result, they increase the prices they’re willing to pay. Other concerned buyers see this and do the same thing.

These buyers then outbid each other. It can result in a bidding war that forces the shares into an uptrend.

The last five times Fair Issac was oversold, and at this support, a rally followed. The same thing may be about to happen for a sixth time.

Read Next: Wolfspeed Stock Plunges 59% On Bankruptcy Fears: Options Traders Cash In