$LITX at $22.87: the setup for $48.59 has a problem

Let me start with the awkward part. The scenario on $LITX runs to $48.59, which is +112.5% over 1 to 3 weeks, and the idea is wrong at $25.10. The stock is at $22.87. That is already below my own stop.

So why write it up? Because a stop on a close is not a stop on a print, and because the structure is still telling a story I want to follow. The session is down 4.5% on volume at 0.1x normal. Nobody is rushing to sell this and nobody is rushing to buy it. Thin tape like that can mean exhaustion, or it can mean a stock nobody has bothered to look at yet.

Broke, swept, slid anyway

The daily chart gave a change of character down through $27.98. That is the break. Then price ran the lows at $25.35 and closed back inside the range, which is the kind of sweep I like to see after a break, because it looks like someone taking the stops and handing the stock back.

Then it slid anyway. That is what bothers me. A clean sweep should not be followed by a quiet bleed to $22.87. There is also an unfilled bearish imbalance from $26.15 to $27.56 sitting between here and the break level, and that is where any rally will have to prove itself.

What is stacked just above price

The liquidity map is crowded right on top of the stock. The swing low is $22.85, two cents under the last price. Above it sit bearish gaps at $22.93, $23.55 and $24.05, a staircase of unfilled space.

I read that two ways. Gaps get filled, so there is a short path of magnets overhead. But the swing low is basically being tested now, and if it goes there is no floor I can point to on this sheet.

The daily patterns do not settle it. A falling wedge leans up, a spinning top says indecision, and a bearish harami leans down. All of it is printing in a flat trend, so I give the candles very little weight. I would not build a trade on them alone.

The bull case

• Sweep of the $25.35 lows that closed back inside the range
• Falling wedge on the daily
• Buyer lifted $360K at $23.20
• Bearish gaps overhead act as fill targets

The bear case

• Price already below the $25.10 invalidation
• Change of character down through $27.98
• Volume at 0.1x normal shows no real demand
• Unfilled imbalance from $26.15 to $27.56 caps rallies

The $23.20 print

The biggest off-exchange print was 15,503 shares at $23.20, about $360K, on an uptick, so a buyer lifted. Off-exchange share was high. That is a single order crossed away from the public book, not a crowd of small trades, and I would not dress it up as more than that.

It is also under half of yesterday's biggest block, so the dark pool read is normal, not loud. And the stock now trades below that print. Whoever bought at $23.20 is sitting on a small loss today. Interesting, but not proof.

The road to $48.59

The target is the resting liquidity at the equal highs. To get there, price has to reach the supply block at $42.00 to $46.07, the zone where the move that broke structure started, and have a retest of it hold. That is the trigger. Confirmation is a close back above the break level on rising volume.

That is a long way from $22.87, and I will be straight about it: the first job is not the supply block. It is reclaiming the break level and chewing through the imbalance on the way. Until volume shows up, I am watching, not paying up.

Kill switch

Any one of these and the thesis is over, no averaging down, no renaming it.

• A daily close below the swept low at $25.35
• A settle under $25.10 that holds into the close
• A retest of $42.00 to $46.07 that fails
• A bounce that stalls below $27.98 on fading volume

Bottom line

I lean bullish because the sweep, the wedge and a buyer lifting at $23.20 all fit a stock that wants to retrace the break. But the invalidation is a close below the swept low, and if that close prints, the sweep was the real move and I step aside without arguing. Right now I am waiting for the tape to either rescue the idea or end it.

The desk leans bullish. Bull or bear, the kill switch above is what keeps either call honest.

Sources and further reading: SEC EDGAR filings for LITX · LITX quote, chart and data on StockMarketLoop.

Data as of Oct 20, 7:11 AM ET from the Making Easy Money Academy data desk: options positioning, FINRA short volume, the off-exchange trade record, the structure map, SEC filings and the ticker's headlines. Vaughn McNair and the Making Easy Money publication may hold or trade positions in the names discussed. This is speculation and education, not financial advice.