According to Finviz, Navistar International (NYSE:NAV), Mellanox Technologies (Nasdaq:MLNX), Petroleo Brasileiro (NYSE:PBR) and Rovi (Nasdaq:ROVI) are the top performers over the last week, racking up gains between 18% and 43%. All have market caps greater than $2B and average volume greater than 1M shares per day. Is there still room to get in, or is time to take profits? Here is the technical breakdown.

After falling from a high of $71.49 in 2011 to a low of $18.17 in 2012, investors in Navistar International are getting a reprieve from the selling in 2013. Over the last week the stock is up over 43%, and with the close at $35.65 on March 12, the stock has nearly doubled since the 2012 low just over four months ago. This stock has a history of dipping down towards the $20 (or below) and then staging an aggressive rally to $70 or above. It happened after the 2006 low, and then again after the 2009 low. Whether it occurs this time is yet to be seen. Overall though, I like the bullish trade. Finding a low risk entry is the tricky part, as the stock can be very volatile. My strategy is to wait for a pullback, and wait for the stock to rise again. Once it does, the low of pullback can be used as a stop. Right now, a decent stop level is just too far away, even though there is a lot of long-term profit potential over the long term if old pattern repeats.



Mellanox Technologies had an incredible bull run, from trading below $10 in 2009 to $120.05 in 2012. Late 2012 saw the stock fall off that high to a low of $41.75 in January 2013. The jump off that low to the $65.55 close on March 12, and the more than 28% rally  over the last week, should have both short-term speculators and long-term investors interested. For the bullish case, there were two big spikes in volume in January as the stock bottomed, likely signaling selling exhaustion. Once again I like the long trade, but with the rapid rise recently, a low risk entry is the tricky part. My strategy here is the same—be patient and wait for a pullback. As long as the pullback stops before $50 and begins move higher again I like the long, with a stop below the low of the pullback.



Petroleo Brasileiro is another stock that has been beaten down over the long-term, but snapped higher over the last week, racking up a nearly 20% gain. Even with the jump though, this stock is in a downtrend across all time-frames and I am not seeing a lot to be optimistic about just yet. The stock recently put in a low at $14.40. In order to create any “technical optimism” I need to see another low that is higher than this, coupled with a rally through the resistance zone of $19 to $20.63. Until those events occur, speculative dollars are better placed on other long trades.



Rovi has been rallying for several months, after hitting a low of $9.91 in July. Over the last week it moved up nearly 19%. Long-term the prospects are very mixed for this stock. It collapsed to the $9.91 low after reaching nearly $70 in early 2011, so the long-term trend remains down. The series of higher lows over the last several months though does offer some optimism that a turn-around could be underway. While I don’t especially like the stock simply because of the conflicting technicals at the moment, for those who are considering the stock there is a simple trendline that can be used as a stop to control risk. Buying in the current price area, a stop can be placed near $17 (trendline) or near $13 (just below October low). This controls the risk but gives room to let the stock fluctuate if a major long-term turn-around is underway.



The Bottom Line
As the market makes new highs, these beaten down stocks picked up buying interest this week. Navistar and Mellanox look to have long-term upside potential, but jumping in without a plan isn’t advisable. Wait for a pullback, formulate a plan and these volatile stocks could pay off. Petroleo and Rovi will need to do a bit more to change their long-term outlook, but they are potential major turn-around stories if they can break through some resistance levels and successfully create a higher lows. For right now though, I prefer to leave these latter two alone as there are plenty of better long trade candidates with major index nearing or surpassing all time highs.
 

Related Articles
  1. Investing

    What Investors Need to Know About Returns in 2016

    Last year wasn’t a great one for investors seeking solid returns, so here are three things we believe all investors need to know about returns in 2016.
  2. Budgeting

    Plated Review, Is It Worth It?

    Take a closer look at the ready-to-cook meal service, Plated, and learn how the company can help you take the hassle out of home cooking.
  3. Investing News

    How China's Economy is Now Like America's

    China's economy could take the global economy down with it; why that might be good news in the grand scheme.
  4. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
  5. Chart Advisor

    3 Charts That Suggest Now Is The Time To Invest In Real Estate (VNQ, SPG,PSA)

    Real estate assets have some of the strongest uptrends around. We'll take a look at three candidates poised for a move higher.
  6. Chart Advisor

    Stocks With More Upside Due to Bear Traps (TAP, SPY)

    A bear trap is a pattern that typically leads to at least a short-term rise in prices. Here are stocks exhibiting the pattern.
  7. Active Trading Fundamentals

    New Traders: Trade the Market in 5 Steps

    New traders shouldn’t throw money at securities without knowing why prices move. Follow these five steps to tilt the odds in your favor.
  8. Fundamental Analysis

    South Korea - King of Exports

    Read about one the most important and successful exporting countries in the world, and learn more about the types of products it exports.
  9. Investing News

    Volatility Vexed? See What the Experts Are Saying

    Volatile times lead to a diversity of opinions on where the market is headed. Here are takes from five investing luminaries.
  10. Investing Basics

    The January Barometer: Is it Still Relevant?

    The January Barometer has been historically accurate. Will that be the case in 2016?
RELATED FAQS
  1. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
  2. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  3. What are some of the most common technical indicators that back up Doji patterns?

    The doji candlestick is important enough that Steve Nison devotes an entire chapter to it in his definitive work on candlestick ... Read Full Answer >>
  4. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  5. Tame Panic Selling with the Exhausted Selling Model

    The exhausted selling model is a pricing strategy used to identify and trade based off of the price floor of a security. ... Read Full Answer >>
  6. Point and Figure Charting Using Count Analysis

    Count analysis is a means of interpreting point and figure charts to measure vertical price movements. Technical analysts ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center