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.

NEW UPTREND CHANNELS

First things first: find the trends and make sure you are on the right side of that trend. Below are 5 stocks with clear uptrends. I only include 5 because one should only stick to a handful of stocks and leave the rest for research. If you try and own or trade too many stocks, this can lead to overtrading which reduces profits due to trading costs, margin calls, inability to make clear and decisive decisions, etc.

So, sometimes it is more efficient to find 5-7 stocks and stick with them. Find your favorite stocks based on clear signals from your favorite technical indicators and with a clear uptrend/downtrend. Trade those stocks based on the trend lines - buy at bottom of trend, sell at top. Only introduce another stock if those favorable signals show signs of deterioration along with the break of the trendline.

During this time of trading your favorite stocks, there is always time for research, but the only time to enter into different stocks is if/when your technicals deteriorate and your trades start losing money. If it ain't broke, don't fix it.

I like to use MACD's, STOCHASTICS, MONEY FLOW and ADX indicators for the technical indicators and I always make sure I can identify a uptrend channel. Here are a few of my favorite uptrend stocks that have been working.

COEUR D ALENE CP NEW(NYSE: CDE)




MercadoLibre, Inc.(NasdaqGS: MELI)




FREEPORT MCMORAN B(NYSE: FCX)




MICRON TECHNOLOGY(NYSE: MU)






GOLDMAN SACHS GRP(NYSE: GS)




Notcie the slope of each trend - the lower the degree of the angle, the less profitable and less risk. The higher the degree of trend, the more profitable but also more risk.

NOTE: Whether the market has more to correct or not, these stocks should continue on their trend unless they break through that bottom trendline. Yes, they are associated with the market but new stock leaders will turn before the market bottoms. Notice that many of the stocks have recently tested that bottom trend at a time the market has been correcting.

MU - Channel Break.

2 charts: one story - many endings.

A long-term channel break occurring in MICRON TECHNOLOGY(NYSE: MU) could bode well for itself in the next bull market. A channel break, as shown in the first chart, is the sign of a reversal of a trend and direction of the channel. The trend has been down for Semis since 2000 as you can see in The Other Commodity post. If you believe we are to emerge from this crisis stronger, then high-tech manufacturing could be our new shop floor.

If we look at the second chart, which shortens our time frame, we can see a potential cup and handle formation forming. Cup and handle formations are traditionally continuation patterns, and not long-term bottoming patterns, but the channel break could be of more importance in determining which way this stock should go from here.

And since we are in the midst of the unfamliar, a stop loss should be placed at around 2.50 which would break the pattern and cause for more consolidation or continuation of the downtrend.