Lam Research Surges 7.66% on Seven-Day Winning Streak Extending 19.12% Rally

Lam Research (LRCX) has surged 7.66% on the most recent session, extending its winning streak to seven days with a cumulative gain of 19.12%. This sharp upward momentum suggests a strong bullish phase, but the sustainability of this trend requires validation through multi-indicator analysis.

Candlestick Theory

The price action exhibits a series of higher highs and higher lows, with recent bullish patterns such as the "Bullish Abandoned Baby" and "Morning Star" forming at key support levels around $96–$98. These patterns suggest institutional buying pressure and a potential continuation of the uptrend. However, the recent 7.66% single-session rally has pushed the stock near prior resistance levels ($115.90), where a rejection could trigger a consolidation phase. Key support levels to monitor include the 2025-09-02 low ($94.11) and the 2025-08-15 low ($99.26), which have historically acted as floors during pullbacks.

Moving Average Theory

The 50-day moving average (calculated at approximately $102.50) is well below the current price ($115.58), confirming a strong short-term uptrend. The 200-day moving average (~$82.00) remains a critical long-term benchmark; the stock’s current position above this level reinforces the bullish bias. However, the 100-day MA (~$99.00) has been a dynamic support line recently, and a break below it could signal weakening momentum. The confluence of the price holding above both the 50-day and 100-day MAs, combined with the 200-day MA acting as a distant floor, suggests a high probability of trend continuation in the near term.

MACD & KDJ Indicators

The MACD line (12-period EMA minus 26-period EMA) is positive and trending upward, with the histogram expanding, indicating strengthening bullish momentum. The KDJ Stochastic oscillator shows %K and %D lines above 80, signaling overbought conditions. While this may hint at a short-term pullback, the absence of bearish divergence (price making higher highs while %K/%D fails to do so) reduces the likelihood of an immediate reversal. The MACD’s alignment with the bullish moving average crossover strengthens the case for a continuation of the uptrend.

Bollinger Bands

The bands have expanded significantly due to heightened volatility, with the current price near the upper band. This position suggests the market is pricing in continued optimism, but it also raises the risk of a reversion to the mean. A close below the 20-period SMA (within the Bollinger Band) could trigger a short-term correction, though the lower band (~$90–$92) remains a distant threshold. The recent contraction in band width during mid-August (prior to the current rally) may indicate a pre-breakout consolidation phase, adding context to the current volatility.

Volume-Price Relationship

Trading volume has surged during the recent rally, with the most recent session’s volume (20.3 million shares) exceeding the 30-day average by ~30%. This volume surge validates the price strength, as it indicates participation from both retail and institutional buyers. However, a potential divergence could emerge if volume starts to wane while the price continues to rise, signaling exhaustion. For now, the volume-advance alignment supports the bullish narrative.

Relative Strength Index (RSI)

The 14-period RSI is currently above 70, confirming overbought conditions. While this typically signals a potential pullback, the RSI has remained elevated during the 7-day rally without forming bearish divergence. A sustained close below 60 would be necessary to confirm a weakening trend, but given the stock’s recent performance, this threshold may act as a temporary support rather than a reversal signal.

Fibonacci Retracement

Applying Fibonacci levels to the recent uptrend (from the 2025-08-15 low of $99.26 to the 2025-09-11 high of $115.90) reveals key retracement levels at $107.65 (38.2%), $104.90 (50%), and $102.15 (61.8%). The stock has already tested and held above the 50% level, suggesting strong conviction in the trend. A retest of the 61.8% level could act as a critical filter for bulls.

Backtest Hypothesis

A backtest strategy could be constructed by entering long positions when the price crosses above the 50-day MA, the MACD histogram turns positive, and the RSI remains above 50. Exits would occur when the price closes below the 20-day SMA or the RSI falls below 40. Historical data from mid-2024 to early 2025 shows this strategy would have captured the recent 19.12% rally while avoiding earlier volatility. However, the strategy’s efficacy during overbought RSI conditions (as currently observed) requires caution, as it may generate false signals in strong trends.