Saturday, November 23, 2013

MU Micron Technology Weekly Chart Upward-Sloping Channel Overbot Rising Wedge Negative Divergence Price Extended Einhorn Fave

Hedge fund manager David Einhorn announces a position in MU this week and is gun-ho bullish. He may want to call a meeting with his chartists to rethink the concept. MU formed a very nice base in 2011-2012 in the sideways channel and the positive divergence (green lines) launched MU one year ago.  The stock went from 5 to over 20, +300%, a 4-bagger, in 12 months time, a phenomenal run. The rising red wedge, and longer-term blue rising wedge, overbot conditions, and negative divergence (red lines) all say down is the path forward. With momo stocks, however, they can take a little time to burn off the upside energy. The MACD line remains long and strong so after a price drop, another matching or higher high is likely so the MACD can set up with negative divergence and identify the top. This behavior hints at a jog move forward over the next 1 to 3 weeks, down-up-down.The pink dots show price extended well above the moving averages requiring a mean reversion (lower prices). A potential H&S is developing (light blue lines) so a head at 20+ and neckline at 16.5 would target 12.5 if the 16.5 fails.

The skinny upward-sloping channel remains in place and no doubt the MU bulls are looking forward to a top rail print at 22. Keystone's 80/20 rule says 8's lead to 2's so 18 would hint that 22 is on tap. The 19.80 print led to 20.20. A 20.80 print would lead to 21.20 and 21.80 would lead to 22.20. MU can likely be shorted here forward. It is a risky trade since it has enjoyed a lot of upside momo and if Einhorn is in the stock, his fundamental analysis must point to something very good on the horizon, either new products or services. However, purely based on the charts, MU is a short here on out. The 21.20-22.30 area may be an attractive short entry area which may occur over the next couple weeks after a brief pull back occurs first. The stock will be broken if the lower blue trend line fails. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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