HAL9000
Long

LM: More upside after breakout, stay long

NYSE:LM   LEGG MASON INC
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This thread takes over from the preceding one, where we suggested to go long at 30 with a target at 34.50 - REACHED.

FUNDAMENTALS IMPROVING
Over the course of the past quarter, we have seen slow sequential improvement in AUMS
The industry overall is doing better, in an environment where market conditions have been improving

EXCELLENT TECHNICAL BEHAVIOR
The stock is now looking positive on all time frames
Most MAs are in the right order, with positive cross-overs confirming positive trend
Last Friday gave us a long awaited breakout and close above $35.00/Share
Friday also gave us a shy hammer in good volume , which suggests bulls are progressively taking over

SKIES ARE CLEAR FOR AGGRESSIVE UPSIDE TARGETS
If the breakout plays out properly from here, as expected...
The next target could be $10 higher, but this would take time to play out
Hence the longer term, 2017 theme I highlighted in the previous thread
Main intermediate targets are $37.85 / $42.00 / $45.00

WHAT NOW, AFTER A 15% GAIN?
Current long investors (see previous thread below)
Increase position size by 20%
Stop loss should be raised to $33/Share

New money: Buy the breakout
Buy above 35 in half size
Same stop loss at 33


Comment: Breakout confirmed above 35 and fuelled, as expected, by continued sequential improvement in AUM flows for January. This is still a good time to increase position size by 20%, while raising the stop-loss to 34.00.
Comment: Stock up >2% yesterday in >3x volume on takeover rumors. It neared our next target at 40 intraday yesterday. Owners should HOLD. New money should await a better opportunity to enter.
Comment: The stock breached the all important $38 level intraday yesterday for the second time, but failed to close above it - for the second time. Yesterday's intraday reversal could be worrisome if not for the overbought condition which has been prevailing since mid Feb and is trying to be worked off. STAY LONG BUT RAISE THE STOP LOSS TO 35, above the previous channel resistance turned support.
Trade closed: stop reached: Stock closed yesterday below 35 (our stop loss). close position and take profits.
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