Lam Research Corp. (LRCX) is turning higher after a long decline last year. The charts and indicators are mixed at this juncture so we could see a sideways to lower correction in the weeks ahead rather than continued strength. Let's take a closer look at this semiconductor stock noted by Jim Cramer on Real Money today.
In the daily bar chart of Action Alerts PLUS holding LRCX, below, we can see that the downtrend from March has been broken. LRCX has rallied above the 50-day moving average line and the 200-day line and the 50-day line has a positive slope now and the 200-day line is flattening.
The daily On-Balance-Volume (OBV) line shows a long decline and only recently turned upwards signaling a shift in buying. The Moving Average Convergence Divergence (MACD) oscillator crossed the zero line in late January for a buy signal and reversed to a take profits sell signal last week.
In the weekly bar chart of LRCX, below, we can see that prices made a deep decline or correction of the previous rally. Prices recently crossed above the now flattening 40-week moving average line. The weekly OBV line has broken its downtrend line from November 2017 but it is far, far away from its peak.
The weekly MACD oscillator gave a cover shorts buy signal and an outright buy may be weeks in the future.
In this weekly Point and Figure chart of LRCX, below, we can see a long-term price projection of $305 but new highs are a long way off and there is plenty of chart resistance overhead.
Bottom-line strategy: LRCX has rallied the past two months but the move lacks a good base pattern and it lacks strong and expanding volume. Prices could still move higher from here but it is not a rally that I would trust -- I like to see volume confirm a move. LRCX may warrant another look in a few weeks.