Home » Technology » Alcatel Lucent SA (ADR) (NYSE:ALU) Is Trading Near To Critical Resistance

Alcatel Lucent SA (ADR)(NYSE:ALU)’s shares have been showing increased volatility in the past few weeks and the stock saw numbers of ups and downs session.

The stock started the New Year on optimistic note and rose 25% in the first week and moved back to above 50-Day Moving Average of $1.54. The stock soared from $1.39 to $1.75 in the first week and then pulled back to $1.57. The stock never pulled back below its $1.54 mark.

Following the week, the stock consolidated around $1.55-$1.65 levels in the next 3-week and the stock once again moved back to the previous high of $1.75 on January 23, 2013. However, the stock failed to broken the resistance and then pulled back to $1.57 level again.

In the past couple of trading sessions, the stock has risen over 10% and now trading higher by 5% at $1.75. Now, it would be interesting to see if the stock could trigger a break out after hitting $1.75 twice in the past one month.

Last week, analyst at Citigroup upgraded the stock to Neutral from Sell. The firm notes that thanks to Alcatel’s recent financing, the bankruptcy risk for the company has been reduced – a fact that is clearly reflected in a recent 50% rally in the stock price. However, He sees only modest potential returns for ALU investors given the recent run in the stock.

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2 Responses to “Alcatel Lucent SA (ADR) (NYSE:ALU) Is Trading Near To Critical Resistance”

    • My opinion.
      Short Jan 2014 calls to hedge that bet.
      The $1.50 call still gives you 25% potential growth over the year and provides a deeper hedge than the $2.00 (split the bid ask spread when selling).
      Earnings on Thursday so you may want to make that evaluation soon.