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CHART ANALYSIS


Lucent Technologies Making A Slow Move Down

08/12/04 04:14:01 PM
by Andrew Hetherington

A head and shoulders points to downside for Lucent Technologies.

Security:   LU
Position:   N/A

Figure 1: Weekly chart of Lucent.
Graphic provided by: SuperCharts.
 
The weekly chart for Lucent (LU) shows an 11-month head and shoulders top. The volume on this pattern is near perfect and the shoulders are symmetrical. My last writing on this chart ("What's Up With Lucent?" Traders.com Advantage, July 14, 2003) was to lock it away for the grandchildren when it was just under $2.00. It went as high as $5.00 and eventually broke the long-term uptrend on April 20, 2004 in the $4.20 area. On this day it had a magnificent one-day reversal with 182 million shares traded. This was the warning of ID (impending doom). The time to bail out was when prices broke below this line. It was no coincidence that the third fan line was broken on the same day of ID. Long and short-term holders should take heed when this fan line is broken.


Figure 2: Daily chart of Lucent.

On the daily chart the breakout is on increased volume on the way down. The usual hesitation ensues in the $3.00 area prior to the inevitable down move to fulfill the pattern's strength. There will be support at the $2.75 area but this equity should worm its way lower toward the $2.00 support or just slightly higher. This support area is where I would choose to buy long once again. There will be plenty of accumulation in this area once again thereby making it a safer trade in the long-term. However, down is the current trend.



Andrew Hetherington

Classic Dow Theorist who trades as a pure technician, using pattern recognition.

Toronto, Canada

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Date: 08/12/04Rank: 5Comment: 
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