Lightspeed POS ($LSPD) is a recent, cloud computing IPO that is setting up for a massive breakout after a 4-month consolidation. Here’s the simple setup for buying the breakout entry.
After going public in September 2019, cloud software company Lightspeed POS ($LSPD) traded in a range until breaking out to new highs in November 2020.
After doubling over the next three months, $LSPD formed a new all-time high in February 2021.
Since pulling back in March, Lightspeed POS has been trading in a sideways range and is now poised for an explosive breakout to resume the uptrend.
Continue reading for our simple chart analysis of the ideal buy entry point to potentially score big gains with a breakout entry.
Monstrous Revenue Growth
As with most of the trades in our swing trading report, we primarily look for a combination of strong earnings and/or sales growth and a proper basing pattern.
$LSPD reported three consecutive quarters of increasing revenue growth at +62%, +78%, and +127% respectively, though it currently lacks earnings.
Since huge earnings growth is typically a target of institutional accumulation, fund ownership has also increased from 179 to 340 since June 2020.
Lightspeed POS also has an IBD relative strength rating of 92, with its price doubling in less than four months.
16-week Base: The Breakout Launchpad
As shown on the weekly chart below, its 10-week moving average has turned up and is providing support at the lows of its recent base of consolidation:
The Buy Setup
Next, let’s drill down to the shorter-term daily chart to determine the ideal buy entry point:
As circled on the chart above, the current rally was sparked by an undercut of several weeks of lows in May, followed by a big volume gap up on May 20.
After rallying +30% off its May lows, $LSPD pulled back and found support between its rising 10 and 20-day exponential moving averages–both of which are now above the 50-day moving average that is turning up.
With all these positive signs of building momentum, we are now on the lookout for a breakout above the clear resistance area of $74.
If the price of Lightspeed POS closes above resistance and holds, then the stock could quickly test the base highs (around $80) and blast off to new all-time highs.
Waiting for a breakout above the base high before buying is an option.
However, given the clear resistance at $74, we prefer a more favorable risk-reward by buying a breakout above the resistance level (with support from the 10 and 20-day EMAs just below).
Finally, recent IPOs have been doing well lately, with strong price action in stocks such as $RBLX (a recent winner), $GLBE, $OLO, and $UPST.
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