Lumentum ($LITE) continues to work on a base. Here is my current plan. (June 29, 2020)LITE CODX LITE
I want to do a quick followup on Lumentum ( NASDAQ: LITE ). This stock keeps flirting around with breaking out. One of the things that I have been talking about is the three sides to any base.
What I am talking about is a stock or an index, for that matter, that comes down on the left side as it drifts down. And then the second side is like the bottom, the bottom of the box, the support level right here. And then the third side is the climb out of the base like this, but this is a real key part. And a lot of times the bottom of the box, the bottom of the base here will be based on the 200-day moving average, sometimes the 50-day moving average as well in stronger stocks and this, obviously, has not been a strong stock; it’s down from almost $95.00 down to below 80.00, so it’s not really bad but not that great either.
This is a stock that is still in the process of forming a base. I don’t want you to get faked out by this and buy every rally. Instead, I would say, why don’t you just maybe set a price alert at $79.00 or even $80.00, something like that. And then set another price alert down here at about $73.00. And then if you do that the only time you are going to be tempted to buy the stock is when it does break out of this range. And you will also be alerted to what the stock is doing, the fact that the stock is down to test the bottom of the box, the base, the 200-day moving average, you will be notified about that.
So you set a price alert here and then you set another one down here. One up here, one down there, and then as long as the stock is in the middle of the box you don’t care. If you keep looking at this stock every day, you are going to get shaken in, you are going to get shaken out, it’s like the market has got you upside down, shaking you up and down until all of the change comes out of your pockets.
So I would just say watch this stock and remember we’ve seen this with CODX ( NASDAQ: CODX ); where this thing, a half a dozen times it has looked like it’s ultimately going to go higher. And then certainly last week, on Tuesday, it broke out and while the stock is still above that level, where the stock was trading during the day, it’s coming back down to test us. So this is one of those that my suspicion is, at one point, this is going to go to 20.00, 22.00, maybe it will keep going higher than that. But who knows what it’s going to do between right now and when it ultimately makes that move?
It’s a similar thing with Lumentum ( NASDAQ: LITE ) here. I think the way this thing is setting up here if sure looks to me like it could be running to 85.00 or $90.00. I have no guarantees, I can’t project the future but that is just the way this chart is looking. The challenge is this, this stock could be setting up, it could keep drifting like this for another month until it finally runs up. Maybe as it starts to run up into earnings or something like that, but that’s not for over a month.
The bottom line here on Lumentum ( NASDAQ: LITE ) is, I would just watch this stock. Don’t be super active in it. Just watch the stock and see how it sets up. I think ultimately this is going to give you a good trade but the stock is going to have to tell us when that trade is, we don’t get to determine it, okay?