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Ten Takeaways From Navistar's Chart

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Six out of 11 analysts rate the shares a "hold" or worse.

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Today's chart is of Navistar (NYSE:NAV), which manufactures and sells commercial and military trucks, buses, diesel engines, and recreational vehicles, as well as provides service parts for trucks and trailers worldwide.



What I'm Looking At:
  • Strong outperformer, up more than 58% year-to-date.
  • Month-long consolidation phase (cup-with-handle formation?) outperforming the S&P 500 Index (INDEXSP:INX).
  • Earnings release on Wednesday, September 4, before the market opens, could be the catalyst to break shares out of consolidation phase.
  • Average historical earnings move is 9.9% according to Trade-Alert.com.
  • The 10-day buy-to-open put/call ratio is reading 1.86, indicating that option players are purchasing nearly twice as many puts than calls.
  • Ten-day put/call ratio ranks in the 80th percentile of all readings taken during the past year, an indication of pessimism.
  • Short interest is high, nearly 20% of the float.
  • Short positions may be underwater as a big chunk was placed at lower prices.
  • Short interest ratio is 13, indicating it could take 13 days to cover based on NAV's average daily volume.
  • Six out of 11 analysts rate the shares a "hold" or worse, possible future upgrades after a possible positive earnings release.
Strategy: On aggressive trade would be buying a call ahead of next week's earnings in anticipation of breakout after release. Target = round-number $40 level.

This article by Tony Venosa, CMT, was originally published on Schaeffer's Investment Research.

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Twitter: @schaeffers
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No positions in stocks mentioned.
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