Micron MU and the Persistence of Stable Trends

Mar 24, 2017: 2:59 PM CST

“Trends, once established, have greater odds of continuity than of reversing.”

Micron (MU) is a stellar stock that reveals this price principle over the last few years.

Let’s take a look at Micron (which is gapping up strongly today) with respect to two trend reversals and the stable persistence of these trends in motion.

A new uptrend began in early 2013 as price broke out to new swing highs while volume and momentum similarly rose through 2014, confirming the uptrend in motion.

The best strategy was to buy retracements along the way as volume and momentum continued trending higher with price.

Even though the uptrend was persistent and stable – as price surged from $8.00 to $36.00 – not even the best uptrends can last forever.

As such, a persistent decline in volume in 2014 gave way to a negative momentum divergence at the end of 2014 which set the stage for the end of the uptrend and a trend reversal to a downtrend.

The downtrend triggered in early 2015 and – though price fell faster – the persistence of the downtrend was consistent into early 2016.

Finally, a positive momentum divergence – along with mid-year bullish volume inflow – set the stage for the bullish trend reversal that takes us to where we are right now.

When stocks show this level of persistence of trend, it helps to study it and model the price behavior along with the best trades that developed along the way.

Then, go search for similar stocks in similarly stable up (or down) trends and trade those strategies along the way!

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Corey Rosenbloom, CMT

Afraid to Trade.com

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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).”

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