Thursday, January 7, 2010

AUY vs. MU

Here is a view of why the short early cycle/long late cycle may be quite profitable in the short term and also give you a bit of downside protection.

AUY Channel

The objective is to expect a bounce to the median channel and even the upper band. Watch for breakdown at support channel. If it breaks, strategy will have to be re-evaluated.

MU Channel

*Notice it is in the median of its channel - it can still thrust to that upper channel and then create the downside correction/consolidation period.

The looming risk in this trade is if AUY breaks down at trendline(it can happen) and MU keeps going - that would hurt, but worth the risk.

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