LSI Industries Inc. (LYTS)

[stocktrademan]

Thanks for reply. What happened with this company? And, would you go so far as to say those conditions no longer exist? I thought I was buying the bottom and expect to try to risk a one contract covered call for my initial position.

I don't see any news related events to the break of the support line at 8, was checking this site.

http://finviz.com/quote.ashx?t=lyts&ty=c&ta=1&p=d

So it just tells me the stock went down for a technical reason, break of support. Everyone was watching the lows betting it would bounce when it didn't.

The clue that it wouldn't bounce was that the MACD indicator was below its zeroline and remained pointing down. Notice that the previous bounces started only when the MACD was pointing higher. Once the MACD started to point higher end of day close, then people would consider buying or doing covered calls with a close stop on the low right before it turned up.

Ideally with doing bullish covered calls I would consider that or even better have the MACD positive above 0 and starting to curl back down so the covered call is placed right when the chart is 'stalling' but still going to be in an uptrend. That way the position has the uptrend (macd>0) supporting it instead of a downtrend (macd<0) opposing it. And in that case if the macd crossed back down below 0 then I would close the covered call and find another. The trend changed as indicated by macd going negative and the price trend changed down.