LL Swing Trade + Long-term Trade Entry

LL (Lumber Liquidators) will be added as an Active Long Trade & Long-term Trade idea here around the 15.74 level following the recent breakout & backtest of this bullish falling wedge pattern. As this trade has the potential to morph into a multi-month trend trade with the potential for above average returns, LL will also be added as an Active Long-Term Trade idea (a description for each trade category can be found at the top of each category just below the list of symbols when viewing "Trading & Investment Ideas" on the menu bar).


The white arrows on the weekly (second) chart above show a set of buy signals. This is only the third such signal in over a decade with the previous two weekly buy signal resulting in rallies/bull markets of roughly 780% & 40%. Those signals are:

  1. A cross back above the 30 level following a period of oversold readings and..
  2.  Confirmation of the buy signal via a bullish crossover on the PPO, both of which recently occurred on LL.


A couple of points worth mentioning on LL. To begin with, this is clearly a counter-trend trade, with LL still in a primary downtrend which has wiped out 90% of the value of this stock since it peaked in November 2013. Add to that the fact that the intermediate-term trend & some of the long-term trends in the U.S. equity markets are bearish as well. As with all counter-trend trades, this should be considered an aggressive trade and one should evaluate whether or not that meshes with their unique trading style & risk tolerance.

Another consideration with this trade would be sure to make the proper beta-adjustment to your position size in order to account for the above-average risk which also goes hand-in-hand with the above average gain & loss potential. For example, the percentage gains to the three price targets (T1-T3) from current levels are: 8.3%, 15.1% and 47.1% with a downside loss potential of 11.3% to the maximum suggested stop of any close below 13.95. That is the maximum suggested stop while those only targeting T1 or T2 should consider a stop at higher levels, ideally using an R/R of 3:1 or better to your preferred price target(s).

Oct 8, 2015 10:58am|Categories: Completed Trades - Long, Long-Term Trades- Completed|Tags: |1 Comment

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