Lam Research Surges 4.90% as Golden Cross and Bullish Indicators Signal Strong Uptrend

Candlestick Theory

Lam Research (LRCX) has exhibited a bullish reversal pattern in recent sessions, marked by a strong 4.90% gain on the most recent trading day. The candlestick structure suggests a potential breakdown of prior resistance levels, with a key support zone forming around $128–$131, as evidenced by repeated bounces in late September and early October. The price action indicates a shift in sentiment from bearish exhaustion to aggressive buying, particularly as the stock closed near the upper shadow of a long white candle, signaling strong momentum.

Moving Average Theory

The 50-day moving average (approximately $103–$105) has crossed above the 100-day ($98–$100) and 200-day ($89–$91) averages, forming a Golden Cross that historically signals an uptrend. This alignment suggests short-term bullish bias, with the 200-day MA acting as a critical psychological floor. However, the 100-day MA currently lags behind the 50-day, indicating potential for further consolidation before a sustained break above $140 could validate long-term strength.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the line crossing above the signal line, reinforcing the bullish momentum. The KDJ oscillator shows the stock in overbought territory (K=85, D=78), suggesting a short-term pullback may occur. However, the divergence between the KDJ’s overbought reading and the MACD’s upward thrust implies that the trend may persist despite temporary profit-taking. Caution is warranted if the RSI fails to confirm the KDJ’s overbought signal.

Bollinger Bands

Volatility has expanded significantly, with the upper band reaching $143 and the lower band contracting to $127. The current price near the upper band ($137.81) suggests overbought conditions, but the band’s widening indicates sustained buying pressure. A retest of the lower band could provide a high-probability entry point if the trend holds.

Volume-Price Relationship

Trading volume spiked to 10 million shares on the most recent upsession, validating the price surge. However, volume has been inconsistent in prior rallies, with mixed signals between bullish closes and moderate volume. This suggests the move may lack broad participation, though the recent surge aligns with the MACD Golden Cross, increasing confidence in trend continuation.

Relative Strength Index (RSI)

The 14-period RSI stands at 68, nearing overbought territory. While this suggests short-term caution, the RSI’s upward trajectory indicates a strong underlying trend. A close below 50 would signal weakening momentum, but as long as the RSI remains above 55, the uptrend is likely to persist.

Fibonacci Retracement

Key Fibonacci levels at $131.37 (61.8% retracement) and $128.33 (78.6% retracement) have acted as dynamic support. A break below $128.33 could trigger a deeper correction toward $115.58 (100% retracement), but the current price near $137.81 suggests buyers are defending the 61.8% level aggressively.

Backtest Hypothesis

The backtest strategy of entering a long position on a MACD Golden Cross and holding for 20 days demonstrated robust performance, achieving a 102.47% return versus the benchmark’s 47.04%. This aligns with the current technical setup, where the 50-day MA has just crossed above the 100-day MA. The strategy’s high Sharpe ratio (0.68) and lack of drawdown suggest it is well-suited for low-volatility environments like the current uptrend. Integrating this approach with Fibonacci support levels and RSI monitoring could enhance risk-adjusted returns by filtering false breakouts.