During the 'Lightning Round' segment of Mad Money callers get to ask Jim Cramer what he thinks about stocks they are interested in. One caller on Wednesday night asked about Lam Research Corp. (LRCX) : "This stock is a buy on a pullback," said Cramer. Let's check the charts.
In this daily bar chart of LRCX, below, we can see that prices have been in a strong uptrend the past 12 months. LRCX is trading above the rising 50-day moving average line as well as the rising 200-day moving average line. The trading volume has been steady the past year and has risen for the most part on the rallies.
The daily On-Balance-Volume (OBV) line has been strong since early June and tells us that buyers of LRCX have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator has been bullish since July but recently narrowed towards a possible take profits sell signal.
In this weekly bar chart of LRCX, below, we can see that prices are well above the rising 40-week moving average line.
The weekly OBV line has been improving from a December 2018 low but it has diverged from the strong price action. The OBV line is well below its previous high.
The MACD oscillator turned bullish last February and it remains in the strong configuration.
In this Point and Figure chart of LRCX, below, we can see that the software is projecting an upside price target in the $380 area.
Bottom line strategy: The rally in the broad market is getting very extended and potentially vulnerable to a meaningful decline. LRCX could decline along with the broad market so I would rather stand aside from new commitments until the dust settles.
