LNR - Linamar update

For any interested in LNR it made it to a low of $15.35 and closed today at $15.56. This may establish the new lower trend boundary.

Note the following points - history:

• blue arrows indicate the price touching the new trend line


• the last two (yesterday and today) bounced right along on it


• the 50SMA (pink moving average) corresponds with the new line


• the MACD is moving up and will intersect the green momentum trend line this can act as confirmation more than indication, lower red circle (keep in mind MACD is a derivative of the price and represents a following trend so getting to know the chart without it is a better long term plan...more on that another time perhaps)

Entry point:

The upper red circle contains the entry point for a long position, I will watch it closely on Monday and perhaps trade on Tuesday. Monday could be used but the odds aren't as good without one more day of action right above the trendline to confirm the entry is good. I like to see a reasonable bounce first.

Target:

The upper trend line has not been established yet so there is no defined target yet. The upper blue line now only indicates some price highs. The trend line will most likely end up parallel to the lower line which places a possible target at $19.50...almost a $4 max profit. That will not be known until the price peaks and starts down.

The red horizontal line is an historically significant support / resistance line and COULD hold the price below $17.75 as it did on May the 9th. Minimum target is $2.25

Stop:

Set for $15.25, approximately $0.25 under the trend line, buy in may be as high as $15.75. Max loss is $0.50 per share

Profit / Risk ratio:

So P/R ratio is between 4.5:1 and 8:1. Either is acceptable even excluding that I have decent profit already on this stock.

Strategy:

• Enter the position early next week.


• Leave the stop wide enough to let the price move as it may hover under $17.75 as it did in May, perhaps only as high as $16.50 until it crosses


• The lower trendline and the 50 SMA will eventually squeeze the price to the line


• aggressive trading would follow that lower trendline with a stop just under


• conservative trading will hold it closer to take a small profit if the price pulls back from the line


• Worst case is the price drops and a $0.50 per share loss is realized...always know the worst case...actually the real worst case could be that the price gaps down to $14.80 or so which jumps past the stop and sells at the lower price...it is possible due to the gap up from that price in early may. I think it very unlikely but worth mentioning.

Should anyone be brave enough to try this or any other trade that I outline I wouldn't mind hearing about them. I wouldn't post this unless I seriously was going to follow my outline...keep in mind that conditions may change between now and the actual order that may have me not trade the stock and I may not post that fact until after...so you do take your chances, do your own due diligence...whatever that is for you.

JD.