MU No Longer In An Uptrend - Indicates Bearish Market Sentiment!
The fundamentals look great but the market disagrees...
I've been bullish on this stock for a while but all good things must come to an end.
You know a stock is going up when it makes higher highs and higher lows (green circles). That means it's going up.
It made a lower low (red circle). That means it's not in an uptrend anymore; another way of saying it's not going up.
I drew in the most basic trendline, connecting the lows. It broke that trendline down. That means the market sentiment has changed.
It crossed below the 200 day moving average. That means that over the last 200 days, on average, it's gone down. That's another way of saying 'it isn't going up', or 'its not in an uptrend' Or more accurately, 'its going down'.
It means the current sentiment is not bullish. It's bearish. Only a CHANGE in sentiment would make it go up. You should only buy if you can see something that would make everyone change their sentiment. Something that no-one else knows! Without that change, it will KEEP GOING DOWN!
Otherwise, it's a great time to short it. It's likely to pull back a bit because it's oversold right now, perhaps towards the 200-day moving average, and that's the perfect short opportunity (with a stop loss above the 200 day moving average).
Micron is a cyclical stock, meaning it's prone to these wild swings. Everyone who knows about that area of the semiconductor market knows that microns earnings will decrease DRAMATICALLY at some point when the cycle ends - we just don't know when that is. It's 100% definitely not a good time to buy, because if it doesn't go down in the next few months, it will go down the few months after that. It seems that the overall market has started to decide to sell this. So make sure you're ahead of the others here, and sell before the herd! Like if this helps you, and follow me for stock analysis (and bitcoin!)
I've been bullish on this stock for a while but all good things must come to an end.
You know a stock is going up when it makes higher highs and higher lows (green circles). That means it's going up.
It made a lower low (red circle). That means it's not in an uptrend anymore; another way of saying it's not going up.
I drew in the most basic trendline, connecting the lows. It broke that trendline down. That means the market sentiment has changed.
It crossed below the 200 day moving average. That means that over the last 200 days, on average, it's gone down. That's another way of saying 'it isn't going up', or 'its not in an uptrend' Or more accurately, 'its going down'.
It means the current sentiment is not bullish. It's bearish. Only a CHANGE in sentiment would make it go up. You should only buy if you can see something that would make everyone change their sentiment. Something that no-one else knows! Without that change, it will KEEP GOING DOWN!
Otherwise, it's a great time to short it. It's likely to pull back a bit because it's oversold right now, perhaps towards the 200-day moving average, and that's the perfect short opportunity (with a stop loss above the 200 day moving average).
Micron is a cyclical stock, meaning it's prone to these wild swings. Everyone who knows about that area of the semiconductor market knows that microns earnings will decrease DRAMATICALLY at some point when the cycle ends - we just don't know when that is. It's 100% definitely not a good time to buy, because if it doesn't go down in the next few months, it will go down the few months after that. It seems that the overall market has started to decide to sell this. So make sure you're ahead of the others here, and sell before the herd! Like if this helps you, and follow me for stock analysis (and bitcoin!)
Trade active:
The market can stay irrational longer than you can stay solvent. Every day i read great things about micron. The fact of the matter is, it doesn't matter how good a company is if you're just trying to make money from stock price rises. All that matters is how many buyers there are. And with micron, there just aren't enough.
On this chart, you see how MU bullishly broke above the 200 day moving average, then bullishly re-tested the trendline, then couldn't break through. This means the bulls lost that battle; although there presence was more than initially expected. Then it bearishly came back down, re-tested the 200SMA, bearishly broke it down, and has now bearishly closed below. This means there simply aren't enough buyers for this great stock. The bears are currently in control. It also broke down the psychological level of $50, which was a level of support.
I'm not sure if it's only because of the tech selloff today or if it's going to last at all, but I have now entered a short position. Stop loss above the 200SMA. Target is under 40, but i might close it before the earnings release (because i expect it will be good... we should see how many people want to get out of their positions too, if there's a large spike down, which may happen despite good earnings because people know this is a cyclical stock and are waiting for a good time to get out...)
So i'm short. If there aren't enough sellers here, then we'll probably just range for a bit (and i'll close the trade at a good time because that's boring).
Alternatively, we might make a triple bottom around $46, in which case i'll probably take my profits.
The market can stay irrational longer than you can stay solvent. Every day i read great things about micron. The fact of the matter is, it doesn't matter how good a company is if you're just trying to make money from stock price rises. All that matters is how many buyers there are. And with micron, there just aren't enough.
On this chart, you see how MU bullishly broke above the 200 day moving average, then bullishly re-tested the trendline, then couldn't break through. This means the bulls lost that battle; although there presence was more than initially expected. Then it bearishly came back down, re-tested the 200SMA, bearishly broke it down, and has now bearishly closed below. This means there simply aren't enough buyers for this great stock. The bears are currently in control. It also broke down the psychological level of $50, which was a level of support.
I'm not sure if it's only because of the tech selloff today or if it's going to last at all, but I have now entered a short position. Stop loss above the 200SMA. Target is under 40, but i might close it before the earnings release (because i expect it will be good... we should see how many people want to get out of their positions too, if there's a large spike down, which may happen despite good earnings because people know this is a cyclical stock and are waiting for a good time to get out...)
So i'm short. If there aren't enough sellers here, then we'll probably just range for a bit (and i'll close the trade at a good time because that's boring).
Alternatively, we might make a triple bottom around $46, in which case i'll probably take my profits.
Trade closed: target reached:
Taking off 75% of the trade for a 18.5% return.
Micron is now hugely oversold, and at an area of support. I also have a different trade that i want to get into, so it's a good time to take profits and use my money effectively.
I expect bad earnings, so i'm leaving 25% in to run for 6 months or so. I still expect it to go under 40, eventually. I'll move my stop to breakeven and just let it run. I won't update this post, that's it for this trade.
Back when i posted this, everyone was bullish. I was one of the only ones to see past the mirage and spot the warning signs.
Lesson of the day: when a stock has a low p/e, it can go a lot lower.
When a stock has seemingly good fundamentals, it doesn't matter if no-one else is buying.
The market knows more than you, and the smart money sold ahead of the herd. The smart money knew the cycle was ending. I didn't, but I saw the smart money's effect on the chart, and instead of fighting it, I went with the flow. It paid off.
The market knows more than you; don't fight it.
Taking off 75% of the trade for a 18.5% return.
Micron is now hugely oversold, and at an area of support. I also have a different trade that i want to get into, so it's a good time to take profits and use my money effectively.
I expect bad earnings, so i'm leaving 25% in to run for 6 months or so. I still expect it to go under 40, eventually. I'll move my stop to breakeven and just let it run. I won't update this post, that's it for this trade.
Back when i posted this, everyone was bullish. I was one of the only ones to see past the mirage and spot the warning signs.
Lesson of the day: when a stock has a low p/e, it can go a lot lower.
When a stock has seemingly good fundamentals, it doesn't matter if no-one else is buying.
The market knows more than you, and the smart money sold ahead of the herd. The smart money knew the cycle was ending. I didn't, but I saw the smart money's effect on the chart, and instead of fighting it, I went with the flow. It paid off.
The market knows more than you; don't fight it.
That's the power of a daily candle close below the 200SMA. I'm surprised it was strong enough to break the double bottom support too, but i'm not complaining! 10% in one day!