Wow, I had not realized how bullish
LMT
has been over the past several years. LMT was actually the first stock I ever purchased -- 5 shares at the price of $213.95. Too bad I did not hold some of the position!
LMT has clearly been trading in the rising channel. I identified a nearly textbook AB=CD measure move, shown by the blue lines. AB leg was a $46 move. Price then retraced ~$27, which is in the range of one-half to two-thirds mentioned in Chapter 6 of Murphy. Price then continued the rise of another ~$45 in the CD leg, almost the exact move as the previous leg.
I drew a Fib Retracement from the top of this CD leg and am looking for a retracement of one-half to two-thirds one more time.
This would land in the yellow zone which I believe will act as support (see what happened every other time price retraced to a yellow support zone).
In this zone it will be necessary to watch price action before deciding an entry point. If the entry point coincides with the rising pink support line, that would be another factor to make me more confident in the trade.
In summary:
Long LMT
Wait for price to come into yellow zone and watch price action. Buying in the yellow zone when bouncing off support zone is ideal.
TP1: 242
TP2: Higher high
S/L: Either below the yellow zone or below the rising purple support line
LMT
has been over the past several years. LMT was actually the first stock I ever purchased -- 5 shares at the price of $213.95. Too bad I did not hold some of the position! LMT has clearly been trading in the rising channel. I identified a nearly textbook AB=CD measure move, shown by the blue lines. AB leg was a $46 move. Price then retraced ~$27, which is in the range of one-half to two-thirds mentioned in Chapter 6 of Murphy. Price then continued the rise of another ~$45 in the CD leg, almost the exact move as the previous leg.
I drew a Fib Retracement from the top of this CD leg and am looking for a retracement of one-half to two-thirds one more time.
This would land in the yellow zone which I believe will act as support (see what happened every other time price retraced to a yellow support zone).
In this zone it will be necessary to watch price action before deciding an entry point. If the entry point coincides with the rising pink support line, that would be another factor to make me more confident in the trade.
In summary:
Long LMT
Wait for price to come into yellow zone and watch price action. Buying in the yellow zone when bouncing off support zone is ideal.
TP1: 242
TP2: Higher high
S/L: Either below the yellow zone or below the rising purple support line
Comment:
Ha! I just realized last two times price bounced off the yellow support zone it was at the same time it bounced off of the purple support line! So we can definitely look for this as a place to enter!
Comment:
Also want to clarify that I would expect resistance ~242 so would consider selling entire position there and waiting for next pullback to yellow support zone or rising purple support line one more time before higher high. But this is hard to say until I can see price action if/when the time comes.
Also I would not think of shorting LMT even on these expected pullbacks, it looks too bullish to take the risk.
Also I would not think of shorting LMT even on these expected pullbacks, it looks too bullish to take the risk.
Comment:
50 Week EMA can also be a good place to go long as price has not closed under it in 3 years! If this price coincides with the other levels I am looking for above, even better!