SIA Charts’ relative strength rankings help investors identify opportunities in stocks which are outperforming their peers or index benchmarks on a relative basis. Outperformance often reflects improving investor expectations for strong company growth or sector growth. The rankings not only help investors to identify which stocks in a universe are outperforming and underperforming against their peers, but also when relative performance trends are changing.
In today’s daily commentary, we are going to look at an Electronics and Semi-Conductor Stock, Lam Research Corp. (LRCX). Electronics and Semi-Conductor stocks has started forming initial positive moves and may be an area to keep an eye on in the coming days to see if this early positive trend can materialize into something more sustainable. The Electronic and Semiconductor Sector remains in the Unfavored Zone in the SIA Stock Sectors Report; however, it has strengthened to the top of that zone, now ranking 17th. The sector has moved up 12 spots in the last month and 9 spots in the last quarter, making it one to watch closely to see if this momentum develops into a potential intermediate trend.
Lam Research Corp (LRCX) is currently in the Yellow Neutral Zone of the SIA S&P 500 Index Report but is demonstrating exceptionally strong relative strength, climbing 9 spots in the last week, 193 spots in the last month, and 63 spots in the last quarter. This upward movement reflects consistent increases in money flow into the shares. Currently ranked 136th out of 505, near the top of the Yellow Neutral Zone, LRCX may be a candidate worth placing on your watch list.
In looking at the attached candlestick chart of LRCX, we see the shares trend upwards from the autumn of 2022 up until July of last year, when it bumped its head at the $110 area. Then a sharp pullback ensued from July of 2024 to August of 2024 when the shares found a temporary floor at the $70 handle. The shares trended sideways from $70 to $90 for several months before succumbing to additional selling pressure and a new leg down formed in the late March/early April timeframe when the shares bottomed out at the $58.00 area. Now, most interestingly, we see the shares have gained some traction since early April where a strong uptrend has materialized with the shares currently trading in the mid $80.00 level. If this early positive move can materialize further, resistance may be seen in the low $90 level where the bearish gravestone doji candlestick appears in February of this year. This pattern indicates that buyers initially pushed the price higher, but sellers eventually took control, driving it back down to the opening level. This is an important resistance level to watch to see if the shares can break above this point. To the downside, support will be at the $70.00 area where the shares temporality found a bottom in 2024.
In looking at the Point and Figure chart at a 2% scale for an investment grade analysis, we see the shares form a bottom at the $58.00 level back in April. In the month of May we see a strong rising column of 15 X’s without even a 3-box reversal. It has broken above the long term down trend (red) line at $81.41 and a prior resistance level at the $78.25 price point with upcoming resistance next at $89.89. This will be an important level to watch for. If the shares can break above this point, next resistance is at $99.24 which coincides with the $100 psychological whole number. On the downside, support is at its 3-box reversal and prior resistance level of $78.25 and, below that, the $70.00 to $72.00 area. The shares currently exhibit a bullish Spread Double Top pattern and with an SMAX score of 6 out of 10, the shares are exhibiting some near-term strength against the asset classes.
Lam Research manufactures equipment used to fabricate semiconductors. The firm is focused on the etch, deposition, and clean markets, which are key steps in the semiconductor manufacturing process, especially for 3D NAND flash storage, advanced DRAM, and leading-edge logic/foundry chipmakers. Lam's flagship Kiyo, Vector, and Sabre products are sold in all major geographies to key customers such as Samsung Electronics, Micron, Intel, and Taiwan Semiconductor Manufacturing.
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