Lumentum stock: Wyckoff Theory points to a steep crash soon

Core Viewpoint - Lumentum stock has experienced a significant increase, reaching an all-time high, but may soon face a downturn as it approaches the distribution phase according to the Wyckoff Theory [1][4]. Price Movement and Phases - The stock price has surged by 1,600% from its lowest level in December, reaching a high of $803 [1]. - The stock was previously in an accumulation phase characterized by sideways price action, followed by a markup phase triggered by a $2 billion investment from NVIDIA [3][5]. - Current technical indicators suggest that the stock is nearing the distribution and markdown phases, which typically involve steep declines as investors take profits [4]. Valuation Metrics - Lumentum's forward price-to-earnings ratio stands at 101, significantly higher than the sector median of 21 and the S&P 500's multiple of 23 [8]. - The company's valuation is also higher than other major technology firms like NVIDIA and Micron, which have multiples below 25 [8]. Revenue Growth - The company reported a 65% revenue increase in the last quarter, driven by its components division generating over $443 million and its systems segment contributing $221 million [9]. - Analysts project revenue growth of 76% this year to $2.91 billion and 65% next year to $4.8 billion, with potential to reach $10 billion in the coming years [10].