You don't have to be an expert technical analyst to figure out what's going on in shares of Luxottica Group (LUX). This $25 billion eyewear company has been moving higher in an uptrending channel since all the way back to last summer. With trend line support holding a floor in place for shares of LUX, it still makes sense to be a buyer on the way up.
When you're looking to buy a stock within a trend channel, buying after a bounce off of support is good strategy for two big reasons: It's the spot where shares have the furthest to move up before they hit resistance, and it's the spot where the risk is the least (because shares have the least room to move lower before you know you're wrong). LUX is testing its trend line today, so wait for an indication that shares can still catch a bid at support before jumping in.
The 50-day moving average has been a pretty good proxy for support over the course of this uptrend; that's where I'd recommend keeping a stop.To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.-- Written by Jonas Elmerraji in Baltimore.
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