Two notes on LUMT:
1) It's been declining for a long time. While I agree that it's relatively undervalued, for the sector it's in, it burns a lot of money. Their last earnings indicates that's improving and that further improvements can be expected in coming quarters, as revenues ramp up. So I'd expect them to recover some ground nicely.... about Aug 4th, with the next earnings report.
2) For most stocks 9 months old or less that run big red ink, it is not sufficient to look at their all-time peak. The pattern I've seen, over and over, is look at the highest close in the first week of March. Look again at the highest close in the third week of March. Figure an 80% drop from those two points.
For LUMT, that means the bottom is 5 or 4. I'd bail, dude.
Rare strong companies avoid that. Rare weak companies go lower. But for most, this is the pattern I've seen in hundreds of cases. Use that as your guide.
And for older companies, look back to the range between mid-October and end-October. Many will drop to someplace in that range.
These are the patterns I use to gauge bottoms. In some cases, like ELON, new emergence of new technologies will keep them from sinking that low. For companies under 5 months old, gauging the bottoms is a crapshoot, though many seem to follow the 80% principle, IF they were around March 1st. Newer than that = tough call.
Hope the rule holds up if we hit 2900; if so, any that drop lower might be the best buys when the mkt reverses. |
