October 9

Pick Of The Week – Analysis On Micron Technology (Week 41, 2022)

“US imposes tough rules to limit China’s access to high-tech chips”

These are the headlines from The New York Times and The Washington Post.

Source: nytimes.com, washingtonpost.com

While this piece of news shook the semiconductor industry, has it changed the course of the industry for a swing trade? 

To answer this question and find out if there’s a quick swing trading opportunity, let’s have a look at the chart of this semiconductor firm that specializes in memory products and storage solutions – Micron Technology.

Performance Of US Stock Market vs Micron Technology (MU)

To have a deeper understanding of Micron Technology’s stock (or any stock), it’s advisable to compare its performance with the S&P 500 futures. 

Are you wondering why I chose to compare the shares of Micron Technology against the S&P 500 futures instead of the S&P 500 index? 

The S&P 500 futures is open for 24 hours and 5 days a week. This provides you with crucial information such as the changing market sentiment as the day passes which won’t be made available on the S&P 500 index. 

You’ll be able to predict if the trading day is likely to be bullish, bearish, or neutral, determining if it’s a good time to go long or short. 

Looking at the chart of the S&P 500 futures, you can tell the following about it:

  1. Downtrend
  2. Volatile (its pullbacks can be steep and less predictable)
  3. Bullish at the start of last week, but ended the week lower 

Source: micron.com

Now, let’s have a look at the chart of Micron Technology.

From its chart, you can tell the following about it:

  1. Downtrend
  2. Not volatile (price movements are more predictable)
  3. Had a fairly bullish week

Are you thinking that the shares of Micron Technology is stronger than the overall US stock market (aka S&P 500 futures) because it had a bullish week? 

Taking the volatility and price action of Micron Technology’s shares into consideration. I conclude that shares of Micron Technology is weaker than the overall US stock market. 

Thus, I don’t think that the news about the US clamping down China’s access to chips has changed the semiconductor industry for a swing trade. 

With this understood, let’s have a look at the explosiveness of Micron Technology’s shares.

How Explosive Is Micron Technology (MU)?

Over the past 7 months, MU has experienced 7 explosive down moves. 

The tamest of these down moves measured 11.1% while the most ferocious down move measured 25.1%. 

Are moves of this magnitude explosive?

Knowing that MU has a market capitalization of more than $58b, such moves are phenomenal!

Ok, having met the criteria of its share price being explosive in nature, it’s time to uncover its key price levels to discover if the time is ripe for a quick swing trade. 

Key Price Levels

From the chart of MU above, you can tell where its support and resistance zones are at. 

You can also see that there’s an immediate support zone around $49, and 2 resistance zones around $54 and $59.50.

Seeing that the price of MU has broken down and remains below $54, it’s a positive sign especially when we are looking to short its shares for a quick swing trade. 

I like what I’m seeing. 

The Strategy You Can Use To Trade Micron Technology (MU)

After comparing the performance of MU with the broader US stock market, determining if MU has experienced explosive up moves, and identifying its key price levels, it’s time to talk strategy. 

To stay in business, you must know your entry, profit taking, and stop loss levels in every trading strategy. Yes, trading is a business, which means that your strategy must be well thought out.

Using The Art of Explosive Profits (AEP) framework, I’d like to see MU to drop a little more before considering an entry.

As the name implies, you’ll be looking to consistently catch an explosive move in a short period of time.

Instead of relying on news and hearsay, the AEP course will teach you how to look for strong stocks like MU.

You’ll also learn how to read charts and identify stocks that are about to make a big move.

Finally, you’ll learn how to identify the optimal entry, stop loss, and take profit levels to capitalize on these explosive moves (in a safe manner, of course)!

Have a look at the AEP framework and incorporate this explosive trading strategy to your arsenal to capitalize on more swing trading opportunities.

Why Is Micron Technology (MU) The Stock Pick Of The Week?

Source: micron.com

MU is and has been in a downtrend since the start of 2022. Furthermore, its performance is weaker than the overall US market.

In addition, MU enjoys explosive down moves in its share price, presenting a sizeable reward each time between 11.1% to 25.1%. 

And there’s more! 

MU is at a sweet price point now. It’s just below its critical price level of $54, signaling that a quick short swing trading opportunity is round the corner. 

While I await the opportunity, please keep in mind that I’m not a financial advisor, so please treat this as edutainment and conduct your own research.

Lastly, all photos and images are from unsplash.com, pexels.com, pixabay.com, and tradingview.com.

Here’s What You Can Do To Improve Your Trading Right Now:

#1 Join us in our Facebook Group where we discuss the various ways of applying this by clicking here

#2 Never miss another market update; get it delivered to you via Telegram by clicking here

#3 Grab a front row seat and discover how you can expand your trading arsenal in our FREE courses (for a limited time only) by clicking here

Trade safe!

Here Are The Articles That Might Interest You

Loved this? Spread the word

Join Swim Trading Trade Discussion Facebook Group

Our supportive online community is the best place to learn together with others just like you.