Lumentum Surges 5.19% on Bullish Technicals, Extends 19% Rally on Golden Cross and Strong Volume

Lumentum Holdings (LITE) has surged 5.19% in the most recent session, extending a 19.00% rally over five consecutive days. The stock’s price action reflects strong institutional participation, with volume spiking on recent uplegs and forming higher highs and higher lows, indicative of a bullish trend. This momentum has pushed the price above critical psychological levels and key prior resistance, suggesting a potential re-rating in the sector.
Candlestick Theory
The candlestick pattern over the past week reveals a series of bullish engulfing and morning star formations, confirming the resumption of an uptrend after a consolidation phase. Key support levels are identified at $300-310, where the stock previously found buying interest during pullbacks, while resistance is now dynamically shifting to the recent high of $360.33. A breakdown below the $280-290 range, however, could trigger a retest of earlier troughs around $230-250, as seen in prior corrections.
Moving Average Theory
The 50-day moving average (approximately $305) and 200-day MA ($250) have been sequentially crossed, forming a “golden cross” that reinforces the medium-term bullish bias. The 100-day MA ($280) now acts as a dynamic support level. The stock’s current price above all three averages confirms its positioning within an uptrend, with the 50-day MA likely to act as a trailing stop for trend-followers. Divergence between the MA slopes (50-day steeper than 200-day) suggests acceleration in the trend.
MACD & KDJ Indicators
The MACD histogram has turned positive, with the line crossing above the signal line, signaling growing momentum. The KDJ (Stochastic) indicator, while currently in overbought territory (K=85, D=80), shows a narrowing %K-%D spread, hinting at potential exhaustion in the short term. However, the absence of bearish divergence between price and momentum indicators suggests the uptrend may persist. A bearish crossover in the KDJ could signal caution if volume fails to confirm further gains.
Bollinger Bands
Volatility has expanded sharply, with the price nearing the upper Bollinger Band ($360-370). This suggests a high-probability continuation of the rally, as the band’s contraction in early December preceded the recent breakout. A close above the upper band may trigger a parabolic move, but a retest of the mid-band ($320-330) is likely if volatility normalizes. The lower band ($270-290) remains a critical area to monitor for potential mean reversion.
Volume-Price Relationship
Trading volume has surged on recent uplegs, particularly during the 8.21% rally on December 4 and the 17.13% spike on November 24, validating the strength of the trend. However, volume has shown signs of tapering in the past three sessions, which may indicate diminishing conviction. A divergence between rising prices and declining volume could signal a near-term correction, though the current alignment supports trend sustainability.
Relative Strength Index (RSI)
The 14-day RSI has entered overbought territory (75-80), a common occurrence during strong uptrends. While this does not necessarily signal an imminent reversal, it highlights a potential risk of a pullback to the 50-60 level, where historical support clusters. A breakdown below 50 would suggest a shift in sentiment, though the absence of bearish divergence (price highs above previous highs while RSI forms lower highs) reduces the likelihood of a sharp reversal.
Fibonacci Retracement
Applying Fibonacci retracement levels to the recent $200-360.33 move identifies key psychological levels: the 38.2% retracement at $265 and the 50% level at $280. These areas align with recent consolidation zones and could act as dynamic support. A breakdown below the 61.8% retracement ($215) would invalidate the current bullish case, though the stock’s recent behavior suggests it is likely to hold above $250.
Confluence between the 50-day MA, Bollinger mid-band, and Fibonacci 50% level at $280-300 indicates a high-probability area for continuation of the trend. Divergences to monitor include weakening volume and overbought RSI, which may precede a retracement. The technical setup remains favorably bullish, with risks skewed to the upside unless multiple indicators simultaneously contradict the trend.