The USD 76.8 support, currently tested, should allow Lumber Liquidators to rally again.

According to Surperformance© ratings, the company represents a great opportunity for a trading strategy. Indeed, it usually posts better-than-expected financial statements as in 2013 and the enterprise valuation conciliates with its visibility. Further improvements are expected in margins on coming years but at the same time the rise in sales may induce higher results in 2014.

The downside potential is limited and the timing seems perfect to benefit from a technical rebound. The equity follows a downward trend in the midterm but this declining movement could pause in the short term as the USD 76.8 support push prices up toward the USD 81.7 resistance. Indeed, whereas the stock shows an oversold condition, the USD 76.8 support area currently tested might stop the bearish trend in the short term.

Thanks to the technical pattern and Lumber’s fundamentals, active investors can open long positions above USD 76.8. The target at USD 81.7 could be attained soon. However, a bearish trend would regain the upper hand if the security falls under USD 76.8.