Sunday, November 24, 2013

LL Lumber Liquidators Weekly Chart Overbot Rising Wedge Negative Divergence

LL is a darling for the housing recovery this year but perhaps the cabinets are warped and the floors are scuffed moving forward. LL dumps -15% last week, unnoticed with all the market joy ongoing. The housing and remodeling areas may not be as robust as thought. Construction season now slows down in the northern U.S. States. Future Fed Chair Yellen says there are no asset bubbles in the markets. Well, keep your eyes closed until this chart passes by. LL runs from 10 to 120, +1100%, a 12-bagger, in 2 quick years. Price rides the blue channel upwards into the top last week. The overbot conditions, rising red wedge and negative divergence (red lines) create the spank down. The indicators are weak and bleak, stochastics and RSI about to enter bear territory sub 50%, so lower lows in price are anticipated after any bounce would occur. The 20-week MA should fail. The 50 MA at 83 and rising is in play and will form a confluence with horizontal support at 92-ish which may develop into an attractive downside target.

Adapt this outcome shown above to the other charts posted this morning with the same theme of rising wedges, overbot conditions and negative divergence. Spank downs are likely on tap for markets moving forward. The pink dots show the price extensions well above the moving averages requiring mean reversion (lower prices). LL should continue along sideways to sideways lower into 2014 with 92-ish as initial downside support. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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