Navistar Hits Highest Level In Over A Year: Is There More Room To Run?

Navistar International Corp NAV shares are surging more than 50 percent on Monday following news that the company has reached a wide-ranging strategic alliance with Volkswagen Truck & Bus. Volkswagen is reportedly taking a $256 million stake in Navistar. The companies are expected to collaborate on strategic technology.

Investors are cheering the deal, sending shares of Navistar soaring above $20 for the first time in over a year. The huge move represents a new 2016 high for Navistar and a big breakout from the $10-16 range the stock has been trading inside since March.

Related Link: Navistar Surges 30% After Strategic Alliance With Volkswagen Truck & Bus

From a technical standpoint, Navistar may have room to run up even further. The next resistance level for the stock is likely in the $27.50-$29 range that served as support throughout 2014 and early 2015.

In the meantime, Navistar bulls must be mindful of the large gap that the stock created after its huge jump on Tuesday morning. Even stocks with bullish futures tend to backtrack to fill gaps prior to moving higher. Not only did Navistar create a huge opening gap compared to last Friday’s close at around $14, it also gapped up higher than its previous 2016 high of $16.39 from back in April.

Despite the good news, it wouldn’t be surprising from a technical standpoint for the stock to dip back down to at least the $16.39 level in coming weeks before a possible assault on the $27.50 level.