Advanced Technical Analysis: MU
Note: the following analysis is formulated as an assimilation of Fibonacci, DeMark, Elliott Wave and other technical indicators. It is offered as education and not intended as advice in any way.
Micron (MU:NYSE) is a stock at an interesting juncture with respect to its long term trend. From the 2000 peak, like so many other semiconductor stocks, MU declined 93% into 2003 in what appears to be an unfinished decline (incredibly). The bounce from the 2003 lows, though amounting to a 176% gain, still barely got back to a normal Fibonacci retracements point of 38.2% of the 2000-2003 decline. More tellingly than that however, is the form the bounce off the 2002 lows took: it looks remarkably like a clear three wave, ABC zigzag up, with the A wave from Feb 2003 to July 2003, the B wave down from July 2003 to December 2003, and the C wave up from December 2003 to the Peaks in April 2004.
So far, the move down from the April 5th peak at $18.25 has taken a four wave form, wave 1 from April 5th to May 17th, Wave 2 from May 17th to June 29th, wave 3 from June 29th to August 13th, and what appears to be a wave 4 from the August 13th lows to the September 20th peaks. Each of the impulsive waves (1 and 3) are made up of 5 independent waves themselves, whereas the corrective waves (waves 2 and 4) are clearly overlapped. I would note that waves 2 and 4 are nearly equal in terms of price advance: wave 1 increased by $2.19 and wave 4 by $2.09. The fact that the move up from the August 13th lows has been highly overlapped and corrective looking allows us to confidently conclude that new lows beneath the August 13th lows of $10.89 is the most likely path for this stock over the next several weeks. If indeed this is what takes place, that would then leave a decline from the April 2004 peaks to those new lows that has taken a major trend changing 5 wave impulsive form. It would be at that point that we could then be highly confident that MU has in fact re-started its bearish trend from its 2000 peak and that substantial new lows beneath the $6.60 low in 2003 would be forthcoming in time.
So the template for gaining such bearish confidence is thus based on the analysis: MU could continue to subdivide and stair step lower toward at least the next lower Fibonacci target of the $9.45 area with more bearish potential if that does not hold to the $8.02 price point. Any move immediately above $12.82 would negate this analysis and force us to stand aside until the technical picture became clearer. A new annual low beneath $10.89 would allow us to confidently state that, in time, MU would make new lows beneath $6.60.
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