Charting: LBS Industries

A reader wanted me to analyze LBS Industries (LXU). The chart looks like it hit a near-term bottom, doesn’t it? It’ll be a very short one if it is. The red circle is the breakaway gap down that broke the uptrend and the blue circle is the very sudden dead cat bounce. The gap was unable to be filled and therefore the highly likely move is lower.

This is a 3-year chart of LXU. The chart doesn’t look so hot. After forming a double top, LXU violated the major long-term neckline or support area. This is the “last chance” area. I can tell you from this chart that LXU will be hitting a new low. The first failure at the 200-day MA earlier this year was a big clue. The second failure and the resulting “churning” at both the 200-day Ma and the 50-day MA was another warning sign. The breakaway gap is another warning. The dead cat bounce gave all longs who were long at the gap to sell their positions, resulting in the subsequent decline. I highly suggest that no one goes long LXU.

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