FREMONT, CA – Lam Research Corp. (NASDAQ: LRCX), a key supplier to the semiconductor industry, saw its stock take a significant hit on Thursday, June 13, leaving investors to grapple with whether the sell-off is a temporary blip or the start of a deeper correction. A dramatic intraday reversal has set a bearish tone, making Monday’s trading session a critical test for the stock’s short-term direction.
This article provides a comprehensive analysis of Thursday’s trading action and the key indicators that will shape LRCX stock performance next week.
Thursday’s Trading Recap: A Failed Rally and a Bearish Close
Lam Research stock closed at
2.14 (-2.33%) for the day. While the numbers tell part of the story, the intraday chart reveals a classic and technically significant pattern of a failed rally:
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Weak Open: The stock began the day at $88.77, well below the previous close of $91.66.
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Strong Mid-Morning Rally: Buyers initially showed conviction, driving the stock up more than 2.7% from its open to reach a daily high of $91.23.
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Decisive Rejection and Sell-off: The rally was short-lived. Sellers took firm control around midday, not only erasing all the morning’s gains but pushing the stock into negative territory in a steady decline for the rest of the session.
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Weak Close: The stock closed near its daily low of $88.18, a strong indication that sellers were in command at the end of the day.
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Negative After-Hours: A slight dip to $89.45 in after-hours trading suggests the selling pressure had not fully subsided.
The Bear Case: Why LRCX Stock Could Face More Pressure
The technical picture from Thursday is predominantly bearish and points to potential further downside:
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The Intraday Reversal: The “inverted V” pattern is a powerful bearish signal. It shows that an attempt to rally was decisively rejected, which can often lead to follow-through selling in the subsequent sessions.
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Closing Near the Low: When a stock closes at or near the bottom of its daily range, it indicates a lack of buyers willing to step in and support the price, suggesting the path of least resistance is lower.
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Significant Loss: A single-day drop of over 2% is noteworthy and can shake investor confidence, potentially triggering more profit-taking, especially given the stock’s strong performance over the past year.
The Bull Case: Reasons for a Potential Bounce
Despite the ugly daily chart, bulls can find reasons for optimism:
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Powerful Long-Term Trend: Lam Research is still trading much closer to its 52-week high of $113.00 than its low of $56.32. Strong stocks often experience sharp but brief pullbacks within a larger uptrend, which can present buying opportunities.
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Solid Fundamentals: With a P/E ratio of 24.94 and a dividend yield of 1.03%, LRCX offers a more reasonable valuation than some of its high-flying semiconductor peers. Its critical role in the chip manufacturing process keeps it central to the AI and technology narrative.
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Support at the Lows: The stock did find some support around the $88 level. If this level holds on Monday, it could form a base for a recovery.
Key Levels for Traders to Watch on Monday
Monday’s trading will be defined by the battle around these critical price points from Thursday:
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Key Support Level: $88.18 (Thursday’s Low). This is the line in the sand. A break and close below this level would confirm the bearish trend and could trigger a move towards lower support zones.
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Key Resistance Level: $91.23 (Thursday’s High). For the outlook to turn positive, bulls need to push the price back above this reversal point. A move above this level would suggest Thursday’s sell-off was a one-off event and the uptrend is ready to resume.
The Verdict: Is It Right to Invest?
The technical evidence from Thursday’s session points to a bearish tilt for Lam Research stock heading into Monday. The nature of the reversal and the weak close are significant red flags for the short term.
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For Short-Term Traders: Extreme caution is warranted. The path of least resistance appears to be to the downside. A break below
91.23 resistance.
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For Long-Term Investors: This 2.3% drop could be the beginning of a healthier pullback. For investors with a long-term belief in the semiconductor sector, weakness in a fundamentally strong company like Lam Research can be an opportunity to initiate or add to a position at a lower cost basis.
The first few hours of trading on Monday will be crucial. A failure to hold the $88 support level could lead to a swift decline.
Disclaimer: This article is for informational purposes only and is not financial advice. All investment decisions should be made with the help of a qualified financial professional.
