Here’s how I’m trading Lumentum Holdings ($LITE) next week. (June 26, 2020)


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I want to look at Lumentum ( NASDAQ: LITE ) again. Yesterday I had said that the way this stock had rebounded, volume was pretty good. I wanted to look to buy this stock; knowing though, that it’s a little early. What I mean by that is, the stock has rebounded, it’s gone through the 50 several times, but then ultimately rebounded and we are getting a lot of zigzags here.

I was looking at this saying, “All right, I would look to buy this stock and maybe have a stop right down there.” And then today we get a big market carnage, Lumentum ( NASDAQ: LITE ), up in the morning, always nice to see, and then it falls back into this kind of trading range. So basically the bulls kind of got rejected, it turned out to be not really a fake-out because I am not really looking at it as a breakout. I am just looking at it as this is a really good indication of buying.

And then, of course, you get this here, this here, this is probably like a rebalancing or being added to an index, I don’t know what it is, but the trade is still intact. And in fact, what I am hoping for is that next week, we’ve got Monday and Tuesday and that’s it for Q2, good riddance, but we’ve got Monday and Tuesday of next week; if this thing pulls back to 73.00, the closer to the 200-day moving average the better, that would be a good time to be looking at entering it.

So we are not looking at buying it before it does this, now we are seeing that it’s done that and now it’s coming down. We want to get it lower because this is the drop-dead level right there, this is where your stop is going to be, it has to be there. And right now this is really the trading range, right around here. So the closer you can get to the stop before you buy then the more room you have for price improvement before you would ultimately sell.

So if you are buying up here and your stop is down here, well, this is a lot of ground to give up before you know whether you are wrong or just early. And so I am hoping that we get more of a little pullback here and then I will look at it again. I am not saying if it pulls back I will buy. No, you shouldn’t be thinking like that, I’m not thinking like that. If it pulls back I am going to look at it as a potential opportunity.

The thing that is dispositive would be, what is the stock doing? Has if fallen back here to 73.00 or even 74.00? And am I seeing good buying, am I seeing volume spikes, am I seeing the stock trading on the tape at the offer as opposed to the bid? Stuff like that; that’s the stuff that I will look at to decide whether I want to buy the stock, but it absolutely has to hold above 72.00.

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