What's Driving Up Petrobras And How Far Will It Go?

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It would be an understatement to say that Petroleo Brasileiro Petrobras SA (ADR)PBR shares have had a rough ride in the last two to three months. The stock witnessed a massive slump of more than 50 percent from its early September highs of above $20. However, the stock is up considerably Friday and is showing little weakness.

CNBC's Fast Money Halftime Report trader Josh Brown explained on Friday the technicals of rally in Petrobras’ shares.

"Fundamentals don’t change on intraday basis," Brown said, "but sentiment can and I think the lesson here is that when you see that hammer form in the candle, meaning you have got a really long wick and it almost looks like a mallet and all the buyers come at the end of the day, they manage to close the thing flat or up. What that tells you, and that happens on a day with bad news, is that everyone that wanted to sell it may have already sold it."

Brown is of the view that traders who played the hammer pattern and are in profit must now "play with the house's money."

"I would put in a stop loss where it broke out from, roughly between $9 and $9.25 and I would see what happens, if you get pulled out of the trade, you still have a gain, but you might be able to ride it for a while."

According to Brown, the short interest in the company’s shares tripled in the last two months and everyone seems to have priced in the bad news, which is actually making this long trade on Petrobras work.

Shares of Petrobras were recently trading at $10.88, up 12 percent.

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Posted In: CNBCTechnicalsMediaTrading IdeasJosh Brown
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