Global mobile phone manufacturer and telecommunications equipment company, Alcatel-Lucent (ALU) is a tale of two tapes. What once (pre-merger of Alcatel and Lucent Technologies) was a cult stock with an interesting business in the late innings of the 90’s has since turned into a company operating a commodity business with thin margins and a stock trading below $3.00.
For perspective, please see the below chart of this falling star, looking back to the late 1990’s.
While this ultra-long-term chart is nice for perspective, it doesn’t help us much for technical analysis in the near or even medium term. As such, I zoomed in on the chart to capture the price action since mid-2008, which give us the first defined reference line of resistance near $5.70. While this level is still far away from the stock’s current price. it is worth noting that Alcatel-Lucent (ALU) recently pierced above its 200 week moving average (red line) and now again trades above this line for the first time since July 2011.
Even closer-up, on the daily chart of Alcatel-Lucent (ALU) note that the stock has already had a big run off its October 2012 lows, which to date adds up to a more than 200% gain. In early August the stock broke above a horizontal resistance line that dates back to February 2012. The breakout however was soon thereafter followed by a consolidation period in recent weeks as the stock based above this level that previously acted as resistance. When resistance became support the stock began to trace out a bullish looking pattern, which ultimately led to a powerful breakout to new year to date highs. As such, yesterday, Tuesday September 3rd the stock jumped 11.28% to $2.87, breaking out of the bullish consolidation phase on massive volume. Thus, the stock staged yet another breakout that is clearly visible on both the daily and weekly charts. Given the stair-step approach in which the stock has been climbing, it now looks to have plenty of more upside over the medium term.