During Tuesday night's 'Lightning Round' as part of the Mad Money program, Jim Cramer took a pass on optical equipment maker Lumentum Holdings (LITE) : "It's too much of a trading vehicle for me. I need to take a pass."
Let's check out the charts before we decide.
In this daily bar chart of LITE, below, we can see a pattern of lower highs and lower lows - the simple definition of a downtrend. LITE has not made a new low since November but there are no strong signs of a reversal.
LITE is just barely above the bottoming 50-day moving average line. The declining 200-day line is well above the market.
The daily On-Balance-Volume (OBV) line is on the "jagged" side but basically shows a declining pattern and suggests that sellers have been more aggressive for much of the past year.
The Moving Average Convergence Divergence (MACD) oscillator just rolled over to a take profits sell signal.
In this weekly bar chart of LITE, below, we can see a large topping pattern from early 2017.
Prices are below the declining 40-week moving average line and the weekly OBV line has been weak since March of 2018.
The MACD oscillator has spent much of the time since early 2018 below the zero line. A cover shorts buy signal last month is not seeing much follow through.
In this Point and Figure chart of LITE, below, we can see a downside price target of $35 being indicated.
Bottom line strategy: Jim Cramer is taking a pass on LITE and so will I. Further declines are seen for the weeks ahead.