Chart of the Day: ‘All-Star’ Gets Caught Up in Sector Selling Storm
We recently added Lumentum ($LITE) to the EPS All-Stars basket of TheStreet Pro Portfolio, reflecting its strong earnings and revenue growth that continues to push the stock higher. Since January, the stock is up nearly 100% after a spectacular 2025. However, a recent selloff on moderate volume has given investors a bit of pause.
No doubt, profit-taking set in following a push to the $1,000 level, but now the stock is about 25% lower and many investors/traders are wondering if Lumentum can get back to those levels. We think so but it may take some time to happen.
When a downtrend starts you have choices — either cut and run and sell your position, wait for the next move to happen (after settling down) or just ride out the storm. Tough decision, but notice that each time the stock came down hard following a surge up it has usually turned around.
This time around, however we notice the candles went bearish (pink or purple). In prior moves down, that did not happen. Hence, we should probably wait for a sideways consolidation here before responding to the large move down.
MACD is on a sell signal and has been for two months, but money flows remain strong, and stochastics are turning up (pane 5). Price action is bearish, but volume trends are not, so this could certainly be the bottom, or last week’s low around $750 could be it.
As a member of the EPS All-Stars Lumentum is not rated.
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At the time of publication, TheStreet Pro Portfolio is long LITE.
