Lockheed Martin (LMT) stock has seen a significant decline of over 28%, bringing it near key support levels. Analyst Jay Woods suggests this presents a compelling opportunity for both a short-term bounce and a potential long-term investment. Technical indicators show oversold conditions and a potential bottoming process, supported by strong historical price levels.
Lockheed Martin (LMT) shares have experienced a notable decline, falling over 28% since early March. This sharp drop has brought the defense giant's stock near key technical support levels, signaling a potential opportunity for both a short-term rebound and a longer-term investment, according to analyst Jay Woods.
The recent price action in Lockheed Martin is being described as a classic 'buy the rumor, sell the news' scenario. The stock saw its peak on Monday, March 2nd, the first trading day after an initial attack on Iran began the preceding Saturday. However, the subsequent sell-off has presented a compelling technical setup.
Technical Analysis: A Classic Reversal Pattern
On a one-year daily chart, Lockheed Martin's stock has completed a full trading cycle: consolidation, a breakout, a rally, a topping pattern, and a subsequent decline. A head-and-shoulders top formation indicated a downside target of $90 below the $600 neckline, which was met at $510. This level coincides with a significant consolidation area where previous resistance is now expected to act as support – a phenomenon known as polarity, often indicating a potential shift in trend.
Investment Strategy: Nibbling and Averaging Down
While Woods typically prefers stocks trading above their 200-day moving average, he sees a favorable risk/reward profile for initiating a position in the $500-$515 range. He advises against going all-in, suggesting a strategy of 'nibbling' at current levels and being prepared to average down if the support fails. A break below $500 would prompt caution, with a more significant support area identified around $485, which aligns with the 200-week moving average and the longer-term uptrend.
A five-year weekly chart confirms these support areas and highlights further potential downside risk. The $485 mark is particularly significant, coinciding with the 200-week moving average and the established uptrend on the daily chart.
Momentum and Oversold Conditions
Current momentum indicators suggest oversold conditions on both daily and weekly timeframes. The daily chart shows a bullish divergence in the Relative Strength Index (RSI), hinting at a potential shift in momentum. On the weekly chart, the stock is as oversold as it was in 2025, indicating that while a turnaround isn't guaranteed, the likelihood of a further significant downside is limited, and a bottom is likely being formed.
The Trade: A Multi-Faceted Approach
Woods outlines a flexible trading strategy:
- Short-Term Bounce: Buy a tranche at current levels. If the stock rallies, consider buying more on a break above the 200-day moving average. A target of $550 is identified for filling the gap and reaching the first resistance level. If the sector shows leadership, the rally could extend to $585.
- Longer-Term Hold: If the stock price falls below $500, cost-average in at the $485 level, which offers strong support for a longer-term entry. If the decline continues, consider it a long-term hold, with major support in the mid-$400s and a consistent uptrend dating back to 2012.
This approach caters to both short-term trading opportunities and long-term investment strategies. Woods concludes that recent market activity has provided an attractive entry point for Lockheed Martin, a prominent player in the industrial and defense sector.
