LPTH...just returned from Vegas; sorry for the late response. Good question, Paullie, and that's not a copout. Let's take a look at LPTH (all my opinion, of course):
The longer term uptrend established from the lows in April is still well intact; higher highs and higher lows.
Medium term, LPTH exhausted its most recent major upmove at just under 50 in July with an accelerated decline once support at 42 was broken. The near term bottom of 29 is still intact, even with two days of intraday spikes to 26 or so. Therefore, our strongest support remains at 29 and 20 with pretty good support in the previous congestion area of 25. Conservative slow-moving stochastics are still positive from moderately oversold levels and macd shows no appreciable deterioration.
Now, the most recent upmove through 36 should have provided a springboard to pierce the heavy congestion between 36 and 42 and it did look that way as LPTH hit and then opened at 38. However, the close back below 36 was not a good sign and we now have the beginnings of a new declining tops line from near 50. It will be interesting and significant what happens if and when the short term descending tops line intersects the longer term ascending bottoms line (at about 31-32).
In general, once a resistance point is taken out to the upside it becomes a significant support point to the downside. Short term swing traders could have set a sell stop for one or more trading positions at 36 (or even slightly higher if one were really fast and aggressive) with the knowledge that any repurchase below that sell would be pure profit (same number of shares at a lower cost basis).
Position traders like myself would probably hold any purchases made at 36 and lower until one of three things happen: a) the price falls to any point where one doesn't feel comfortable or can't sleep (this is no joke); b) the weak support at 32 or strong support at 29 is violated; c) slow-moving stochastics turn negative with a noticeable decline in macd. None of those things have happened for me, yet.
Money management becomes paramount when dealing with decisions like this. Ideally, greatest confidence is when a stock takes out a heavy resistance and congestion area with follow-through strength. Currently for LPTH, that won't happen until 42 is overcome. Bottomfishing with close stops (I typically use 2-15% depending on lots of factors) can be done at or near support points (32, 29, 25, 20). At 34 1/8 right now, LPTH is in a "no man's land" where I'd consider it literally as a hold/buy depending upon one's exposure (how much does one have at what cost basis and what percentage of one's portfolio does this figure represent, etc).
The current price and volume is also ideal for manipulation; that should be considered, too, if you have realistic confidence in the company's fundamentals (someone may just want your shares...happens all the time, unfortunately).
Using myself as an example, I have a low-cost core position plus 3 trading positions from 29-30. But I'm also holding/trading many other individual stocks and won't go broke or become homeless if one or three literally go to zero (and that's happened, too!).
So I'm going to hold what I have but am ready (financially and emotionally) to add up to 3 or 4 more trading positions on moves above 36, 42, 48, and 51, and/or on any fundamental news that supercedes or precedes chart movement. I am also ready to liquidate all three trading positions, probably in stages, if any of the support points listed above are violated (or if I have any trouble sleeping!). The core position will be held throughout all of this as I have fundamental confidence in the company and its product that transcends daily or weekly price fluctuations (and of course I'd also sell the core if my knowledge or confidence changed, as it finally did with LU and A).
Now that I've thoroughly confused you and shown you how foggy my crystal ball can be, does any of this help at all?
Thanks again for your questions and observations,
Mark |
