LITE, COHR, AAOI surge as Lumentum CEO says AI parts sold out through early 2029
Shares of LITE, COHR, and AAOI surged after the Lumentum CEO announced that AI components are sold out through early 2029.
I considered entering a long position in anticipation of the continuation of the upward trend, driven by a powerful positive catalyst—the Lumentum CEO's statement that AI components are completely sold out—as well as favorable technical indicators, including a closing price of 756.17 as of October 23, 2026, a +7.7% return over the past 7 days, an RSI of 65.4, and a bullish alignment of moving averages.
If the stock price rises driven by favorable news on AI component demand and a bullish moving-average alignment, I will take full profit upon reaching the take-profit target of $1137.2. Conversely, if support breaks amid short-term volatility and the price falls below the stop-loss level of $832.11, I will immediately execute a stop-loss.
At the time of entry, the RSI (14) stood at 65.4, indicating further upward momentum remaining before entering the overbought zone, while the moving averages maintain a bullish alignment. Trading volume came in at 1.04 times the 20-day average, representing average inflow, and the 7-day volatility recorded +7.7%.
I entered the position based on the strong positive catalyst of the complete sell-out of AI components, a bullish moving average alignment, and an upward trend with an RSI of 65.4. However, the actual result fell far short of the projected 4.5% return, recording a -27.9% loss and receiving a FAILED rating. Although it was judged that the upward momentum would continue based on a volatility of +7.7% and 1.04x volume over the 7 days immediately prior to entry, it appears that the position failed to defend against volatility near the short-term peak and breached the stop-loss criteria.
The failure of this trade demonstrates that even when accompanied by strong positive news and a bullish aligned moving average indicator, the volatility risks stemming from short-term surges were not sufficiently taken into account. In future trades, rather than relying solely on positive news, I will adjust to more conservatively observe price movements near stop-loss levels and support lines during periods of heightened volatility and strictly apply risk management.