Lockheed Martin (NYSE: LMT) Just Broke Out on a HUGE Catalyst – Up to 21% Upside

Lockheed Martin Corporation (NYSE: LMT) just broke out of a multi-month double bottom on a +5.13% single-session surge — and looks headed even higher.

As we’ll get to just ahead, the combination of a blowout earnings report with raised full-year guidance, a landmark long-term deal that locks in years of demand for its flagship fighter jet, and a fresh technical breakout makes LMT one of the more interesting setups on the board. Here’s what’s going on…

The Themes Behind the Move

Lockheed Martin is one of the world’s largest defense contractors, designing, building, and maintaining fighter jets, missile-defense systems, precision missiles, military helicopters, warships’ combat systems, and satellites across four segments — Aeronautics (home of the F-35 fighter jet), Missiles and Fire Control, Rotary and Mission Systems, and Space. Founded in 1912 and based in Bethesda, Maryland, it primarily serves the U.S. government and allied militaries around the world.

In plain English, when the Pentagon or a U.S. ally needs a stealth fighter, an interceptor missile that can knock an incoming missile out of the sky, or a satellite that keeps tabs on threats from orbit, Lockheed Martin is one of the very first calls. Its business hinges on U.S. and allied defense budgets, long-term multiyear contracts, the health of the F-35 program, and how quickly it can ramp up missile production to meet surging demand.

LMT’s latest move reflects a powerful confluence of developments — financial, contractual, and strategic — that have come together in rapid succession to fundamentally reframe the company’s near-term growth trajectory.

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Put it all together, and LMT is looking less like a slow-moving defense giant stuck in a months-long slump and more like a prime contractor with a record $292 billion backlog, a decade of F-35 visibility, a missile business growing at a ~24% clip, and guidance that keeps moving higher.

The story is getting stronger, but the chart is what could determine whether this move has more room to run in the near term. Here are the bullish technical signals traders should be watching now.

Bullish Technical Signals

#1 Double Bottom Pattern Breakout: LMT has completed a clean double bottom, marked in purple on the daily chart. The first trough formed near $490 in June, a rally to roughly $610 in August set the neckline, and the October selloff carved a second low near $500 that held just above the first. That second low is the key detail: sellers had a full retest of the June floor and could not push through it, which tells you supply was exhausted at that level. Monday’s session confirmed the pattern. The stock jumped 5.13% to close at $635.20, clearing the $610 neckline, and the intraday low of $611.27 held right on top of it — the old ceiling acting as a floor on the same day it was broken. The pattern’s measured move, which adds the roughly $120 base depth to the neckline, projects toward ~$730, right next to our second target of $740. The caveat is pace. The stock has run roughly 27% off the October low in about two weeks and now sits just under $638, a level that capped price in the spring. That is why the breakout entry is set above $638, not at the current price.

LMT – Daily Chart

#2 Price Above the 50-Day and 200-Day Moving Averages: LMT now trades above both its 50-day SMA ($540.67) and its 200-day SMA ($566.87). The more important event is how it reclaimed the 200-day. Price had been trapped below that average for most of September and October, and the latest move went through it in a few sessions without hesitation. The alignment is not ideal, though. The 50-day still sits below the 200-day after the late-summer decline, so this is not a golden-cross setup yet. The 50-day has stopped falling and is starting to flatten, and continued strength would set up a golden cross in the weeks ahead. Price is also stretched, about 17% above the 50-day and 12% above the 200-day. That makes the support levels below important. The $610 neckline is the first, then ~$583 (the weekly support zone), then the 200-day near $567. A pullback into that range would be normal digestion, not damage to the setup.

#3 Bullish ADX and DI: The directional read is about as one-sided as this indicator gets. +DI stands at 46.57 against –DI at 9.65, a spread of nearly 37 points, which means buyers control virtually all directional movement right now. ADX at 38.47 sits between the two lines. That is the healthy arrangement: trend strength is well above the 25 threshold but still below the bullish directional line, so the move has not yet reached a blow-off extreme. One nuance is worth noting. ADX first rose through September and early October while –DI was in charge, so part of that strength belonged to the downtrend. During the handoff, as +DI crossed above –DI, ADX dipped, and it is now curling higher again. In other words, the indicator has reset and is measuring a new trend in the bulls’ favor, not carrying over the old one.

#4 Bullish MACD: The MACD line (17.93) is well above its signal line (4.85), and the histogram has widened to 13.08. The sequence behind these numbers is what gives the signal weight. The crossover first fired below zero in October, as the second low of the double bottom was forming. That early reading was meaningful but unproven. Both lines have since pushed above the zero line, so momentum has gone from “less negative” to positive. The histogram has grown steadily for several sessions, which means the gap between fast and slow momentum is still widening — the move is accelerating, not fading. The MACD line has also pushed above its August peak, a higher momentum high that matches price breaking above the August neckline. Together with the ADX read, both momentum measures confirm the breakout in #1.

#5 Above Support Area and the 50-Week and 200-Week Moving Averages: The weekly chart explains the daily breakout. Since the February 2026 peak near $690, LMT had been making lower highs, first in the spring and again in August, along a falling trendline (pink dashed line). Last week’s candle, the strongest weekly gain on the chart in months, broke through that line, and this week’s follow-through pushed price further from it. The $583.12 support area (pink dotted line) sits where that trendline gave way. A level that combines a broken downtrend with a former pivot zone is the kind of shelf the market tends to respect on a retest. LMT also trades above its 50-week SMA ($556.18) and 200-week SMA ($493.29), with the 50-week above the 200-week. That is the golden alignment the daily chart lacks, and it confirms the long-term uptrend never broke. Both troughs of the daily double bottom also landed almost exactly on the rising 200-week SMA. The “decline” was really a test of the long-term trend line, and that test held twice. The daily neckline at $610 also lines up with a weekly resistance level, so the second entry sits on a level that matters on both timeframes.

LMT – Weekly Chart

#6 Bullish Stochastic: On the weekly chart, %K (99.03) has crossed above %D (81.30). The crossover started from oversold territory near 20 only a few weeks ago, a full swing from washed-out to strongly bid, which carries real weight on a weekly timeframe. There are two nuances. First, both lines are now deep in overbought territory, so the move is stretched in the near term. Second, the weekly Stochastic made a similar spike in August that rolled over when price failed at the falling trendline. The difference now is that the trendline has been broken, so the surge has structural backing instead of running into resistance. Strong trends can keep the Stochastic overbought for weeks. The practical takeaway is that a pullback toward $610 offers a better-quality entry than chasing an extended bar, which is why the dual-entry plan exists.

#7 Bullish RSI: The weekly RSI has climbed to 64.34, above both the 50 midline and its own moving average (51.38), and it is still rising. This is a two-part confirmation. Crossing 50 shows buyers now hold the momentum advantage, and the steady upslope shows that advantage is growing rather than stalling. The RSI has also edged above its summer peak, which stalled in the low 60s. That higher momentum high matches the trendline break in #5. At 64, the RSI still has room before the 70 overbought line, so weekly momentum has space to run before it becomes a constraint. With the daily ADX, MACD and double bottom all pointing the same way, this is a setup where both timeframes agree, and that agreement carries more weight than either chart alone.

Risks to Consider

Even strong setups can fail, especially in a government-dependent defense contractor like Lockheed Martin — and especially after a sharp post-earnings run. A few things could knock the stock off course:

• A breakdown back below the $610 double bottom neckline on heavy volume would invalidate the breakout thesis
• Negative company-specific news, broader market weakness, or regulatory changes in the defense sector could trigger a sell-off — particularly after a ~15.2% three-session advance that leaves the stock extended in the near term
• F-35 funding and delivery softness — Lockheed disclosed that costs on the Lot 20 advance acquisition contract exceeded existing authorization and funding in Q3, and the new 10-year framework doesn’t resolve that near-term exposure; Q3 deliveries also slipped to 43 from 46, with nine-month deliveries down to 94 from 143
• Backlog conversion risk — the $292 billion backlog includes large multiyear commitments like the still-undefinitized PAC-3 contract, and final terms, funding, and delivery timing could shift when (and how profitably) that revenue is recognized
• Softer free cash flow and pension needs — Q3 free cash flow fell to $3.0 billion from $3.35 billion a year earlier despite higher earnings, and management discussed expected pension contributions exceeding $1 billion in 2027
• Manufacturing execution and margin pressure — rapidly scaling PAC-3, THAAD, and other munitions output requires supplier investment, specialized components, and skilled labor, and higher production doesn’t guarantee proportionate margin expansion
• Competition from traditional primes like RTX and Northrop Grumman, plus emerging defense-tech players — Anduril unveiled its Steelfin family of surface-to-air interceptors on October 12, with flight testing planned for 2027
• Defense spending and valuation risk — budget negotiations, continuing resolutions, or shifting military priorities could disrupt procurement schedules, and at roughly 20.8x guided FY2026 earnings, the stock already prices in substantial optimism; Morgan Stanley’s $835 target relies on notably more favorable valuation assumptions than several other analysts use

The Bottom Line

LMT is breaking out of a multi-month double bottom on the daily chart while also clearing a falling trendline that had capped it since February on the weekly — a dual-timeframe technical setup that historically signals the start of a sustained move higher.

The fundamental story underneath the chart is just as strong: a Q3 beat with a second straight guidance raise, a record $292 billion backlog, and a 10-year F-35 framework covering 850 U.S. jets.

Combine that with multiple catalysts staggered through the coming months and into 2027 — the December ex-dividend date on a freshly raised payout, Q4 earnings and first formal FY2027 guidance in late January, F-35 lot negotiations, additional PAC-3 and AIM-260 missile orders, and the FY2027 defense budget process — and LMT looks like one of the more compelling risk-reward setups on the board right now.

If this is a trade you want to get in on, here’s how we’d play it. Because the stock has run hard in a short time, we’re offering two ways in — a breakout entry and a pullback entry. Below you’ll find both entry levels, the two price targets that imply 9%–16% potential upside on the breakout entry and 14%–21% potential upside on the pullback entry, and the stop-losses we’re using to manage the downside.

Recommended Trade Setup

Case 1: On Breakout

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For a risk of approximately $34.00 per share, the target rewards are about $57.00 and $102.00 per share. That makes this roughly a 1:2 and 1:3 risk-reward trade. In other words, the setup offers nearly 2x to 3x more potential upside than downside.

Note on Trade Invalidation: This recommendation stays active as long as the technical structure holds. If LMT drops to or below the $604.00 stop-loss before the $638.00 entry triggers, the Case 1 trade is automatically void — the support underpinning the breakout thesis would have broken, and the risk-reward setup would no longer justify entry. (The Case 2 pullback entry below operates independently, with its own $568.00 stop-loss.)

Case 2: On Pullback

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For a risk of approximately $42.00 per share, the target rewards are about $85.00 and $130.00 per share. That makes this roughly a 1:2 and 1:3 risk-reward trade. In other words, the setup offers nearly 2x to 3x more potential upside than downside.

Happy Trading!
Tara and Greg