This LUNR Setup Has Worked Before… Here We Are Again

 

Above is a 60-minute chart of LUNR, and in the lower pane I have a 14-bar stochastics indicator. I’ll be the first to admit I’m not a big fan of oscillators in general. Most of the time they create more noise than clarity. That said, when an oscillator is clearly synced with the dominant cycle of a stock, the signals tend to be far more reliable. In this case, LUNR’s stochastics has done a pretty good job of identifying meaningful short-term lows.

If you look back on this chart, there have been four separate occasions where the stochastics pushed below the buy line and then turned back up. Each time, that turn coincided with a significant bottom and led to a solid rally. Those weren’t minor bounces either, they were tradable moves. That’s why I’m paying attention now, because once again the oscillator is sitting down in the buy zone.

What really adds weight to this setup for me is the price action itself. LUNR is currently sitting at the lower end of a clearly defined price channel, which appears to be providing support around the $18.50 level. I like when multiple tools point to the same area. The channel alone gives me a level to work with, but when you combine that with an oscillator that has historically marked good entry points, the odds start to tilt in your favor.

That said, I’m not interested in blindly buying just because we’re at support and the oscillator is oversold. The way I plan to approach this is simple: I want to see $18.50 hold, followed by the stochastics crossing back above the buy-zone level. That turn is my signal that momentum may be shifting back to the upside.

One very important caveat here is relative strength. I do not want to see relative weakness at these levels. If the broader market is moving higher and LUNR can’t participate or worse if it breaks cleanly below $18.50, then all bets are off. In that scenario, I’m not interested in buying. Support failing while the market is strong is a big red flag.

For now, this is a stock on my watchlist, not in my portfolio. If the pieces line up, it could offer another solid opportunity. If they don’t, I’m perfectly fine standing aside.

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