The Santa Claus Rally May Not be Over Yet: HLF, AVEO, and DEJ Get Dissected

OK traders, are you ready to get started again but need a little inspiration (or a few ideas)? Then take a look at AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO), Herbalife Ltd. (NYSE:HLF), and Dejour Energy Inc. (AMEX:DEJ). Here's why.

Yes, I penned a bullish look on Herbalife Ltd. just a couple of days ago, though for an entirely different reason. Then, I was simply explaining how the stock was fundamentally undervalued after its implosion, and deserved to be trading higher even if the claims/concerns were true. Now, however, I'm going to explain how HLF has started the technical rebound that brewed up right on cue.

Simply put, HLF began to recover on Monday, opening at the high for the day, reaching a new low, and then snapping back to a close well above the low. The action suggests the last of the would-be sellers were flushed out on Monday, and the bargain-hunting bulls have started to tiptoe back in. It's today's action, however, that puts the finishing touches on the recovery effort. Just by moving higher - and from low to high on an intraday basis - Herbalife Ltd. shares have largely verified the bulls are still pouring in now. Let's take it at face value.

Like Herbalife, AVEO Pharmaceuticals, Inc. got the rebound party started on Monday, but it's today's finishing touched that confirm the stock's buy-worthy. Specifically, AVEO hurdled the 50-day moving average line on Monday (after having trouble with it the week before), and has continued on to higher highs today. This higher high also follows a higher low, so the whole shebang is convincingly pointed upward now after the October/November meltdown.

AVEO is biopharma best known - right now anyway - for its development of tivozanib, to treat renal cell carcinoma. The drug, currently in phase III, has cued up mixed messages. Its survival rate is lower than other similar drugs, but its overall response rate is better. It won't entirely matter for traders getting into AVEO today though, as the FDAS decision on tivozanib won't be handed down until July of 2013. This technical setup is only a short-term opportunity, and could wind down by the time shares reach $10.00 (if that).

Last but not least, Dejour Energy Inc. is brewing up not only a short-term rally, but perhaps something that could turn into a long-term rally. Of course, that all depends on whether or not DEJ can clear a couple of major hurdles now within reach.

There are multiple clues here, the first of which is the fact that DEJ managed to move above a falling resistance line (even if only by virtue of moving sideways) in August. Although the horizontal ceilings at $0.24 and $0.25 remained intact and continued to play a role (by sending Dejour Energy shares lower whenever they were tested), we still saw this stock make higher lows, and more recently, we saw this stock's key moving average lines cross one another.... bullishly. In fact, the 50-day line served as support today, pushing DEJ shares back above the 20-day moving average line.

The point is, the undertow is turning quite bullish for Dejour Energy Inc. All it needs to do now is move above the $0.25 mark, which would not only clear the last of that horizontal resistance, but would also carry the stock above the key 200-day moving average line. So, while not ready to roll quite yet, DEJ is a must-have for your watchlist. The daily chart below tells part of the story, but you have to take a look at this weekly chart for the full perspective.