Editor's Note:
After breaking out from a major trading range this semiconductor stock looks poised for more gains.

-James


NEW BULLISH Plays

Lam Research - LRCX - close: 46.03 change: +1.30

Stop Loss: 42.75
Target(s): 48.50, 52.50
Current Option Gain/Loss: unopened
Time Frame: 8 to 10 weeks
New Positions: Yes, see trigger

Company Description:
Lam Research Corporation is a major provider of wafer fabrication equipment and services to the world’s semiconductor industry. (source: company press release or website)

Why We Like It:
The SOX semiconductor index still looks a little overbought with its September through November rally but the index has seen a -5% correction. Shares of LRCX have seen a -9% correction and look a lot healthier with a bounce from support near $44.00. LRCX was stuck in a major trading range between $35 and $44 for months. The breakout from this range looks very bullish. The Point & Figure chart is forecasting a $71 target. The current bounce in LRCX looks like a bullish entry point but I would rather wait for a little dip. I'm suggesting a trigger to buy LRCX (or calls) at $45.25. We'll use a tight stop loss at $42.75 near the 50-dma. More conservative traders could probably use a stop a lot closer to the $44.00 level. If triggered our first target is $48.50.

Suggested Position: Buy LRCX stock @ 45.25
- or -
Suggested Position: Buy the 2011 January $45 calls (LRCX1122A45)

Annotated chart:

Entry on November xx at $xx.xx
Earnings Date 01/27/11 (unconfirmed)
Average Daily Volume: 4.5 million
Listed on November 18th, 2010