Here’s how I’m trading Lumentum Holdings ($LITE) (June 25, 2020)


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I want to look at Lumentum Holdings ( NASDAQ: LITE ). If you study charts at all you probably know exactly where I am going with this. The 200-day moving average, the blue line, is working really, really nice as support. We got the initial rebound off of here and then the times that it has hit, bounce, bounce, bounce, bounce, bounce and now we are back here and we get a rebound just today.

So my suggestion is, you are buying this stock and the low of the day was 71.10 so you’ve got one of two things that you could do; you could put the stop just like at $71.00 or something like that, a little bit below today’s intraday low. Because if the stock is going to rebound, if today is the rebound day, then it shouldn’t go back and undercut this low. Or you could give it a little more room because you can see in times gone by it has kind of jigged around here for a few days. You can maybe put your stop just a little bit under 70.00. I think that’s about 8 percent or something like that; a stop of about 8 percent. So that kind of defines the downside risk.

But this is really what you are looking at: you are looking at these lower highs, these higher lows and as I said, the time to really be getting into this stock would be now with a small position. And then if the stock breaks out above this resistance line, that’s when you are adding more and you are holding it. And then at some point, the stock is going to reverse a little bit and if it pulls back and then holds somewhere that’s good. And then as the stock starts running up here you are buying again.

So you have like 3 entries, this is your first one, this is the second one, and then the third one is like right up here or maybe even kind of down here once the stock shows you that it’s holding, and then you would keep a stop a little bit below there. You have got to be a little bit creative on this stuff but that’s how I would trade this stock.

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