by David Gibbs
Navistar International Corp. (NYSE:NAV) reported better-than-expected Q4 earnings last Monday after the bell (Call Transcript). The commercial truck and engine producer “benefited from fewer charges and an increase in truck sales in advance of new emissions standards in January.”
Earnings came in at $1.19 / share on $86 million in profits vs. a loss of $4.81 / share for the same quarter last year. Last year’s heavy losses were due in large part to the termination of a contract between Ford (NYSE:F) and NAV after the closing of an Indianapolis-based Ford plant.
Sales to the U.S. military helped boost slumping commercial sales, as NAV expects to earn at least $2 billion in 2010 from military sales. Besides new truck sales, NAV is also retrofitting trucks sent to Iraq for use in Afghanistan’s rough and variable terrain.
Shares gapped up through resistance on the open Tuesday morning, opening at just above $37. Shares had previously been turned back at the $36 – level in mid-November and again in mid-December. NAV also traded up on Wednesday and Thursday, finishing the week solidly above its 200-day MA and above $40 for the first time since shares broke down following a head-and-shoulders bottom in late-September.
Technically speaking, this all very positive, and shares won’t hit another important resistance zone until about $41.50, the point at which shares briefly pulled back before embarking on a significant downtrend. As long as the RSI remains within its current uptrend and especially if shares can successfully push through the aforementioned resistance at $41.50, you can turn this into a profitable trade.