LSI Industries and Akorn may finally be in full recovery mode
The bear market was tough on all stocks from a fundamental as well as a technical perspective. However, a handful of names like LSI Industries Inc. (NASDAQ:LYTS) and Akorn Inc. (NASDAQ:AKRX) appear to be turning the corner... at least from a technical perspective. A few long-term investors, however, have picked up on some subtle bullish chart clues from LSI and Akorn.
Like so many other stocks, LSI Industries Inc. (LYTS) lost more than 2/3 of its value between late 2007 and early 2009. However, the last four weeks may have been strong enough to buck that nagging downtrend; the move to last week's high of $6.62 was more than enough to carry LYTS shares above a major resistance line.
A key Fibonacci line (red) is still in play as a possible ceiling though, at $6.35.
The one thing missing from the new bullish thrust is volume, though trading activity during this upswing has still been better than it was when LSI Industries were bottoming in March.
In terms of a target, if $6.35 breaks down as a ceiling, the next Fibonacci checkpoint is $10.51... which is also where we some important resistance back in the fall of 2008. That probably shouldn't be toyed with.
One of our proprietary buy signals was also made for Akorn Inc. (AKRX) a couple of weeks ago. The stock followed-through on the buy reasonably well, but perhaps was a little too hot out of the gate - shares are slightly overbought. It may be wise to wait for Akorn to be reeled in a little bit before stepping in.
Longer-term though, Akorn Inc. is an interesting idea when priced under $2.00; shares were approaching $8.00 before the recession kicked in.
With or without the problem of being overbought, AKRX offers its current buyers one thing that LSI Industries' doesn't.... volume. If the interest is for real, then Akorn should survive any pullback and continue on with its technical revival.
We're setting a near-term mental target of approximately $2.70, though we also recommend reassessing the trade before it reaches that mark - it may have enough momentum to blow past that line when the time comes.