Good morning traders. As a follow up to yesterday’s Looking Ahead piece on the Semiconductor Index (SOX), we have profiled a long setup in SOX component stock LAM Research Corp. (LRCX) below.
Since mid-November of 2012, LRCX has respected the ascending trendline on the weekly chart as well as the 20 week moving average (green line). Two weeks ago the stock bounced off the trendline which slowed the most recent pullback.
It is very possible traders will be presented with the opportunity to initiate a long position at the ascending trendline either this week or next. We understand this would be the second touch of the trendline in two weeks, however this anticipated second touch would also be a higher-low. Moreover, if we can get a long entry at the ascending trendline (50.25) we can use the previous trendline touch as a reference to place our stop under (48.75).
Based on the current rounding shape forming at the ascending trendline, and yesterday’s discussion of the Semiconductor Index, we will be looking to initiate a long position in LRCX.