Who Else Wants to Take Advantage of This Bearish Market? Lam Research Corp (LRCX) Setting Up Nice
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?