How much more pain on Micron Technology – MU ?

Micron Technology stock a chart analysis

The analysis is purely based on technical analysis , rather than fundamental

There are few technical truth need to be understood prior , understanding this fall. There are many discuss on the reason for stock fall is due to china war, some claim price of memory chips,  and some claim supply and demands.  The stock has been an momentum trading for many investors, need to understand where the stock started the journey ?

Where did the rally of Micron start.

  1. A double bottom , consolidation happened on Jan 2016 to May 2016 , which is very bullish pattern for stock which have been falling from $36 to $9 , which was 75% drop.
  2. The stock was hanging in around $9 and $10 for several months , which is good sign. ( refer chart below ).
  3. In June 2016 , it started rallying from $9 to $33  for 1 year. Fantastic 300% gain on this run.
  4. Took a pause for few weeks June 2017 to August 2017, which for a nice cup and handle pattern.
  5. In September 2007 , with heavy volume , breakout happened from cup and handle pattern.
  6. The pattern price target is $60 , around 65% profit , which peaked in March 2018
  7. The overall run from $9 to $60 in 18 months was 566% .
  8. The stock pulled back in March 2018 and in June 2018 created bearish double top pattern to conclude the run from $9 to $60 , a perfect sign to investors to book profits.

Below is the chart which explains in the double bottom happened in 2016.

Below chart explains the cup and handle break out and price target of $60

Chart Source

Where the pain will stop now  ?

There is no clear proof anyone in this world can provide , where the stock can end up. But there are some possibilities could happen.

  1. Strong support at $40 ,  which can hang out for some time
  2. $36 is another great support level , which can drop there
  3. $9 is is 2016 bottom , it can reach there.
  4. It could reach to $50 and form and head and shoulder  pattern , likely can fall to $26
  5. It could reach triple top and reach $60.

Since the stock has made 566% in last 18 months and one of the top momentum stock for many of the investors, based on the past experience on similar stock #4 is very likely scenario.

Which is the stock can reach $50 and can drop from there to $26 or $9.

What choices to  stop the pain ?

  1. If on loss , and within the 7% loss rule – you can sell it
  2. If already in profit , bought when it was in $9, it is time to think to book the profit.
  3. If the loss percentage is more than 7% and can sell covered call to balance some profits.
  4. Buy puts  options to prevent further loss.
  5. Some have hopes that stock could  reach $100 or $300 in a year , yes can hold it on hope and pray strategy . Miracles do happen.
  6. Can keep selling round robin covered calls until break even  /or reaches profits.

Happy Investings !!!!

Share you thoughts on Micron

All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. The information provided here are only entertainment purpose only and the information might not be  correct or falsified. 
The information is generic in nature and not targeted to individuals or individual circumstance. All opinions are simply opinions.

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