Mellanox is an American semiconductors provider with main operation in USA and China. The stock has been trading in a long term bearish trend.

The company is overvalued for a P/E ratio of 173 times its earnings concerning the current fiscal year. Moreover, its enterprise value represents 2.32 times its revenues. “Surperformance” rating for trading strategies suggest a negative outlook on Mellanox. In addition, EPS revisions for the last 12 months have been downgraded from 2.01 to 0.24 (a drop of 88%).

Besides, a recent contact of the upper line of the symmetrical triangle revealed the incapacity of prices to come over this threshold. Hence, a downturn is expected in order to form a path toward USD 39. The short term support meaning for us the target.

Thus, active investors could take a short position on the equity at current prices. The target will be set at USD 39. The stop loss for this strategy will be placed above the entry point at USD 43.6.