-Aug-
01
Who Else Wants to Take Advantage of This Bearish Market? Lam Research Corp (LRCX) Setting Up Nice (Technorati) Technorati | (Del.icio.us) Del.icio.us | (Digg) Digg | (Blinklist) Blinklist | (Comment) Comments (0)

Recently, my friends over at Wall Street Warrior brought an interesting trade to my attention. The company is Lam Research Corporation (LRCX), founded in 1980. Lam is a major supplier of wafer fabrication equipment and services to the world's semiconductor industry. This industry has not seen a tremendous amount of institutional cash flow recently. Couple that with a bearish market and a double whammy technical setup and you could find yourself in the middle of a good shorting opportunity.

The two bearish technical patterns here include a head-and-shoulders and bearish flag. The recent breach of the critical 200Day SMA support confirms the bearish reversal taking place here. A recent pullback on very weak and declining volume sets up a low risk entry point for a short trade here.

The graph above outlines my key points of interest but fails to mention the weakness the industry (Technology/Semiconductors) has experienced lately. The declining volume leading into what use to be key support (200Day SMA) will now serve as a level of resistance. This further leads me to believe that a sharp (and maybe violent) turn could happen very, very soon (possibly today). The average duration for any flag (bullish or bearish) is between 7 and 9 days in length before breaking out in the other direction. Don't look now but yesterday was day number seven. Hold on my friends, we could be in for a rough ride down - are you going to make money shorting this one like I will?

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