Todays Big Stock: Lam Research Corporation (LRCX)

Lam Research Corporation is a supplier of wafer fabrication equipment and services to the worldwide semiconductor industry. Lam Research designs, manufactures, markets, refurbish, and services semiconductor processing equipment used in the fabrication of integrated circuits. Lam’s etch and clean technologies enable customers to build integrated circuits. It’s etch systems shape the microscopic conductive and dielectric layers into circuits that define a chip’s final use and function. Its Customer Support Business Group provides products and services to maximize installed equipment performance and operational efficiency. Its customer base includes semiconductor memory, foundry, and integrated device manufacturers that make DRAM, NAND, and logic devices for these products.

To analyze Lam Research’s stock for potential trading opportunities, please take a look at the 1-year chart of LRCX (Lam Research Corporation) below with my added notations:

 

Over the last 7 months, LRCX has found common areas of support and/or resistance on or at the increments of $5. First, notice the $45 topside resistance (navy), which was also previous support in May. Next, you can see the $40 level (red) and the bottom level of support at $35 (green). The nice thing about LRCX is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you could either short LRCX on rallies up to a $5 level or on any breakdowns of them. If you want a long play instead, you could buy LRCX on a pullback to a $5 level or on any breakout through one of those levels.

 

The Tale of the Tape: LRCX finds the levels of $5 important. These price points always appear to act as either support or resistance. If LRCX rallies back up to $40, you could enter a short play. If it breaks back above $40, you could enter a long play. You could also buy LRCX if it comes down to $35, or short the stock if it breaks that $35 support. Etc., etc., etc!

 

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT