Hi Dipy, just a few comments regarding your statement:
<<Whatever maybe the long-term outlook, there is absolutely nothing to prevent LSI from receding to 30 (or lower) during a market decline.>>
LSI has consolidated and formed one heck of a strong trading base between 34-38 since breaking out at 30 in April! In May it broke a spread triple top at 39 and then double topped at 41 following a major pullback to 30 support! OK, Let's look at the chart...the bottom of the long term bullish trend line is around 29 and I project the top of the current channel at 46. There is major support at 34 and, consequently, a move to 33 would be a double bottom which could result in testing the bottom bullish support line....While I'm not a TA expert, LSI has had a great run and momentum could allow the stock to swing higher, perhaps past 46 and even test 49-50 area!!!
So, if you own the stock you can stay with it since the semi's look great -- LSI looks strong... However, if you've bought June calls as I did weeks ago on the 39 breakout, then you get out while the going is good and wait for a pullback to buy further out calls or the stock on a pullback to the 38-40 area, assuming no major negative surprises in the sector.
Even if we got a 15% correction in the overall market, a 15% correction would bring LSI down to around 37 1/2...about 32% decline would equate to 30 a share for LSI, still within long term bullish support tend line. (Hopefully, the stock would recover quickly!) However, any decline in the stock below 34 due to sell off unrelated to a general market decline would suggest rather a bearish or sell signal specific to the company or sector (i.e., like RDRT and WDC! as you may recall!). Then perhaps you step aside.
At this point, if you own the stock and are a long term investor, you can 'hold' and wait for the stock to turn...or take some chips off the table and sell rest higher or buy back in after a pullback. Depends on your goal!
Bottomline, I can't refute your statement. Good luck.
FNS |
