This photonics stock is already up 600% in one year. Now it’s breaking out again
(See the video above for Jay’s complete chart breakdown.) Here are two trades for Tuesday: One has positive momentum and one is looking to reverse negative momentum. First up is Lumentum . The photonics stock is up 600% over the last 52-weeks and just kicked into another upward gear. We have a clear breakout from a consolidation area going back to April. Upside targets of $1,200 may be achievable quickly. Downside risk is to that old resistance area of $1,000 — the old ceiling should become the new floor. On the daily chart the RSI just broke above 60 and is yet to go overbought above 70. As we have seen in the past, by looking at a five-year weekly chart, shares of LITE may remain overbought and trend higher for months. Given recent momentum and strength returning to the sector it appears a new leg higher is just starting and a new leg to the uptrend I just starting. When talking about stocks that have lost their fizzle, Pepsi comes to the top of the list. Shares are trading at a 52-week lows, down by 12.6% for the year and are 37% below their all-time highs set in 2023. The chart is in a clear and well-defined downtrend but is now at a point where it oversold and setting up for a tradeable bounce. Trying to pick bottoms can be foolish and costly, but we see a potential for a pop and solid mean reversion to its more normalized downtrend as potential reward. Examining the charts on daily basis we see that over extension: Shares are at the low end of their downward channel. Momentum indicators are at oversold levels where the stock has either stabilized or experienced snapback rallies. A rally back to $129 gets it to its recent support levels, which also coincide with former support levels on the weekly charts. The weekly chart shows that recent breakdown in price, but again conditions are at oversold levels that tend to act — at worst — as stabilizing areas. If shares can eclipse this mark then upside targets of $135 to $138 are probable. When looking at things with the largest lens the monthly chart, we see it’s not pretty. There has been a major trend change. However, stochastics are oversold on the long-term time frame which has been rare. In prior occasions this happened at pivot points. We saw a relief rally in May 2025 that gave investors returns of over 20%. Meanwhile the overall trend remained lower. That possibility is there as we head into Thursday afternoon’s earnings where shares have rallied after four of the last five results. The trade is to play a relief rally that could result in a 10 to 20% gain over the coming weeks. Could it be the start of a longer-term turnaround? Let’s not get ahead of ourselves. We saw in Nike that not all beaten down will bounce, but the downside risk seems less than the potential upside reward going into earnings. Jay Woods is the Chief Market Strategist at Freedom Capital Markets. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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