|LPX Weekly Chart|
On Balance Volume on the weekly remains flat, and there's no hint of a divergence either way in the RSI. Thanks to the undulating nature of the channel, the MACD(5,34,5) has been a rather decent indicator of the turning points, however, so we'll certainly keep an eye on that going forward.
|LPX Daily Chart|
Interestingly, the MACD appears to be providing a very consistent signal for directional shifts going back at least to the November time frame. Until that changes, we'll continue to take our cues accordingly.
Where we expect some deviation in the pattern is where we see the diagonal support line now intersecting our channel. This suggests that our horizontal channel may turn into an ascending triangle. If that happens, of course, we'll need to watch for a breakout play to either side. Currently, the intermediate trend is up - and an ascending triangle tends to break to the upside - but that could easily change on a whim.
LPX reports earnings before the open tomorrow, so we'll need to watch what those earnings do to our pattern. Consensus estimates are for $0.19 EPS and $539.90 Million in revenue for the quarter. Annual estimates are for $0.84 EPS and $2.26 Billion in revenue. The pattern for this stock over the past year, though, has been for price to form a spinning top on earnings day, but not do much of anything else. We'll see what tomorrow brings.
How we trade this stock will depend on the pattern that emerges post-earnings. Until we see evidence that the MACD is no longer reliable, our trades will be long on a bullish crossover and short on a bearish crossover. Our exit strategy will be to trail a stop $.05 below the low each day and ride it until stopped out. Our protective stop will be set to just above or just below the signal candle depending on whether we are taking a long or a short position.
If the ascending triangle does form, of course, we'll change strategies to a triangle breakout and play that accordingly. Until then, let's enjoy the oscillation this stock is currently providing.