In this report we analyzed: LRCX, AMD, ROKU, ATOM, MDB, QCOM, DOCU
Lam Research (LRCX)
SummarySummary
- Lam broke-out and has held above the upper breakout target around $282.
- The internal indicators are either weak or overbought, which supports the potential for a false breakout.
- We went long on Friday and put a stop just under $259 (closing price).
Key Price Levels to WatchKey Price Levels to Watch
- First support: $282
- Key Support for continued uptrend: $265 (don’t want to break below here).
- Key Resistance: $309 (above here is bullish).
Lam is a position we have been tracking. The structure of the stock appeared weak, and suggested that the ascending triangle pattern would give to the downside. However, last week, LRCX broke to the upside and held for 3 days. In fact, last Friday it gapped up and held just below the $309 resistance, which is a key level LRCX has to take back going forward.
My concern is the possibility for a false breakout. The internals are not supporting a sustained move. The MFI is in overbought territory as well as the CCI. The MACD histogram is showing a divergence from price, suggesting that the momentum is fading.
Also, the Accumulation/Distribution Line (A/D) is a key leading indicator that helps us gauge what the pros are doing. When it’s making new highs ahead of price, usually, price follows. It’s staying subdued, not reaching a new level while price does, which is not what we want to see.
These indicators help mold our probabilities of making a good trade. However, no indicator is more important than price. Because the indicators are relatively weak, we will use a stop on LAM for this trade with a close below $265. This is a stock we want to own, so if we do get stopped out, we will look for the next setup.
AMD (AMD)
SummarySummary
- AMD has been in a consolidation pattern since April, sandwiched between the 55-day EMA (in red) around $51.50 and the downward sloping trendline in blue.
- The internal indicators are strong, and suggest a resolution to the upside.
- We are placing a stop at $47.40 (closing price).
Key Price Levels to WatchKey Price Levels to Watch
- 55-Day EMA is the first support: $51 – $52
- Below that is $47.75
- Then the blue upward sloping trendline that started in 2016 (below here and things get bad).
- A break above $57 is bullish.
- A break above $61 is very bullish.
This is a stock we want to own for a long time and we are starting that process now. We picked up shares of AMD from a technical perspective for a few reasons. For one, the 55-day EMA (in red), has been solid support for AMD in the recent uptrend. The price is getting bought each time it approaches this level. Furthermore, note how the selling volume is decreasing, suggesting that the sellers are drying up.
The Accumulation/distribution line (A/C) and the CMF, which are fantastic leading indicators, are suggesting that money is flowing into the stock. The MACD is in a classic coiling position, which is when it rises at a 45-degree angle after an uptrend, then settles above the 0 line in a predominantly horizontal fashion. We typically see this before a breakout.
Once again, these indicators help our probability of a making a good trade that can potentially turn into a great buy and hold. AMD is approaching a key inflection point. The 55-day EMA is just below it, and below that is a trend line that AMD has respected since 2016.
Above the current price is the confirmation of cup & handle pattern that began forming at the March high. We will know soon what AMD will decide and we thought it was worth a chance that we get a resolution to the upside.
We will place a stop at $47.45 (closing price). We do not want to be in this stock just before the 4-year trendline breaks, so we will protect ourselves with the stop just in case.
Roku (ROKU)
SummarySummary
- Roku is following our outlined plan perfectly, so far.
- We are targeting sub-$100 and above the $79 region for shares.
- The structure suggests that after the stock bottoms in this retrace, we should be on a path to new highs.
Key Price Levels to WatchKey Price Levels to Watch
- Below $102 and we will look to add at key supports $96, $89, $86, $79
- Below $79 and things get complicated.
- A break above $125 and things get very bullish.
Roku is beginning to fall out of favor with the public. This will be the 3rd time since we began trading Roku in 2017 that sentiment has shifted away from Roku, and this will be the 3rd time that we accumulate shares during weakness.
We have covered demand drying up with ad tech in a global deflationary environment. Ads are usually one of the first items to go when a company needs to tighten its operating expenses. We believe Roku will make It through this process. Because of this, we are comfortable acquiring shares of this stock without a stop due to our time horizon being 5+ years.
I have written extensively about Roku’s long term price structure. I believe we are in the middle of a B-wave retrace that should take us sub-$100 to $79. This is a large price range, but we will look to be buyers within this region once we get signs of bottoming.
The internals are all weak and hanging right above support. Once these supports break, we could get a sharp move down. The MFI is showing positive divergence, which is usually a sign of an impending reversal. If this plays out, I will view it as the b-wave within the larger B-wave, and it should halt below the upper trend line on the chart before reversing to the C-wave down.
If Roku breaks above this trendline as well as the 200-Day SMA, which is around $125, we will look to add into strength. If Roku breaks down further into our target region, we will look to add into weakness slowly.
Atomera (ATOM)
SummarySummary
- ATOM is completing a corrective (A,B,C) uptrend.
- It can extend if we break above $10.
- The internal indicators are all diverging, suggesting a pullback.
Key Price Levels to WatchKey Price Levels to Watch
- Above $10 and we can extend the uptrend.
- Below $7.80 and the green target box comes into play.
Atomera is a small cap that needs one or two deals in the pipeline to close in order to be a viable product. Initiating once a deal is announced may leave some gains on the table, but this scenario also carries less risk.
The structure appears to be tracing an A,B,C uptrend, which is close to completion. This has kept us on the sidelines for now. Also, notice the trend of the indictors from the March low compared to the trend in price. Note how they were in lockstep, increasing with price. Then, at different times, the indicators began trending down as price continued up. These divergences are also suggesting that price is close to topping.
Furthermore, on Friday, we got a bearish engulfing candlestick pattern, which usually precedes some level of correction. If we do break down below $7.80, my targets are in the green box. These targets are based off of Fibonacci ratios and common targets for a pullback following a C-wave uptrend.
However, ATOM still hasn’t broken its 8-day EMA (in green). So, even with divergences showing and the structure suggesting a pullback, it can still extend further to higher levels. If we do get a break above $10, we could easily extend to $10.35, $11.50, $13.50 before getting a notable pullback. We will keep updating you with any changes.
Mongo DB (MDB)
SummarySummary
- It appears that MDB is in a 4th wave consolidation.
- We will use the outlined supports coupled with the RSI hitting the 40-35 region for an entry.
- We will look to go long with a relatively wider stop just in case we get a break below $144.50.
- As long as the $144.50 holds, we expect the final 5th wave to take us to new highs.
Key Price Levels to WatchKey Price Levels to Watch
- Supports levels for a likely bottom of a 4th wave: 55-Day EMA + $185 (likely target), $170, $155.
- Key support for a continued uptrend: $144.50
The price structure suggests that we just completed the 3rd wave off the March low. The standard retraces for a 4th wave pull back is in the green target box, ranging between $185-$155.
There has been a sharp trend change as noted by the MACD cross over as well as Friday’s price gapping down below the 20-day EMA in blue. I would look the 55-day EMA in red as support, which will coincide with the 38.2% retrace level of the entire 3rd wave for a potential buy.
If we do go long, we will place a stop just under the 1st wave at $144.80 (closing price). Below this level and things get complicated. However, as long as this level holds, we project new highs for the 5th wave completion.
Another clue will be the RSI. The green line indicates a likely bottom for price, which is around $40-$35.
Qualcomm (QCOM)
SummarySummary
- QCOM had a strong breakout in price with mixed internals supporting the move.
- If this is a 5-wave move off the lows, we should see a healthy pullback in a 4th wave consolidation between $82-$76.
- Below $72 is bad.
- Above $98 is really good.
Price Levels to WatchPrice Levels to Watch
- Support levels for possible 4th wave bottom: $83, $97, $76.
- Key support for a continued uptrend: $72.
- 5th wave top (projected): $95 region.
- Multi-decade resistance zone: $93-$98.
Qualcomm is a 5G play on the semi-conductor side of the equation. This is a well-known thesis, which has accounted for the stock’s rise in price over the years. We have moved away from it as a 5G play and instead put our allocation for this trend into Marvell, Boingo, Inseego. However, Qualcomm is a solid company that we have been tracking for an entry.
It’s worth noting for anyone watching this stock that we have a clear breakout. The 200-day SMA (in black) has kept this stock in check until recently. Note the strong break above the black moving average, which is the 200-Day. Furthermore, QCOM closed the downward gap from March by gapping up above it. This is also a strong sign that should be encouraging to anyone long QCOM.
The internals are mixed, so price is king for now. The structure suggests that QCOM is completing or will soon complete a 3rd wave off the March lows. There should be a retrace, assuming price has topped on Friday into the green target box between $83-$76.
A break below $72 complicates the picture. Furthermore, QCOM has a lot of work to do overhead. The red band highlights a resistance region that has halted QCOM going back decades (yes, decades). This will be a tough challenge for QCOM to overcome; however, a break above $98 and we could see the price really take off.
Docusign (DOCU)
SummarySummary
- DOCU is tracing a large degree leading diagonal pattern.
- It is due for a 4th wave consolidation.
- The internals are fading and price has reached the upper end of the channel.
- The $112-$107 region is a likely target. However, $126 would be a shallow consolidation while $94 would be a deep one.
- Above the recent high, and DOCU can continue to extend to higher levels, which would change the targets for a pullback.
Key Price Levels to WatchKey Price Levels to Watch
- Above $153 and DOCU can extend to higher levels: $162 and $173 will be resistance levels to watch.
- A break below $126 and the $112-$107 region will be a reasonable target.
- Below $107 and $94 comes into play.
The above chart shows the weekly candlesticks of Docusign since it went public. The weekly trend cuts through a lot of the daily/hourly noise to help gauge what’s really going on. The color of the bars are based off a momentum indicator I like to use on weekly charts: red indicating a period of weakness, blue being neutral and green being a notable uptrend. The lack of red bars is what’s intriguing. Docusign is an incredibly strong stock right now, and as long as their growth remains intact, this trend should continue.
Like many high-flying stocks, its structure is tracking a leading diagonal, which we’ve talked about several times in relation to other stocks, like Roku, for example. This pattern is a 5-wave pattern that tracks a trend channel. Each wave is comprised of an internal 3-wave pattern.
This would put DOCU at the peak of its 3rd wave. We will look to pick up shares on the 4th wave pullback.
Now, if we zoom in to the daily chart, we can get a more granular idea of what price is doing. The internals are all diverging from price, suggesting that the momentum is fading.
DOCU has broken its 8-day EMA in green and found strong support on the 20-day EMA in blue. A break below $126 will confirm a likely top for the 3rd wave, and we will watch for the target areas for entry. A shallow B-wave correction would be between $126-$112. A deep B-wave would be between $110-$94. However, there is a notable cluster of Fibonacci levels between the $112-$107 region.