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Technology Stocks : Micron Only Forum

MU 225.89

-1.1%

Nov 19 3:59 PM EST

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To: John Graybill who wrote (48130)	9/9/1999 11:21:00 PM
From: John Graybill	Read Replies (1) of 53903

Some numbers on the Friday/Monday boomerang: Historical pricing from here: edreyfus.com This data should be enough to make my point. I'm defining the "pre-expiration boomerang" as a bottom happening with two days of the Friday/Monday period before option expiration, defined as: - a 10% drop into it in four days or fewer - a 10% rise out of it in four days or fewer 17 option expiration periods: 4/98 to 8/99 Was there a boomerang?: 04/98: Mon 05/98: nope 06/98: Mon (20% each way!) (earnings) 07/98: nope 08/98: nope 09/98: nope (earnings) 10/98: Thu (the famous market-wide 10/8/98 scam! 20% down and back in the same day!) 11/98: Tue 12/98: Mon (20% each way!) (earnings) 01/99: nope 02/99: nope 03/99: Mon (earnings) 04/99: Tue 05/99: Mon (weak) 06/99: nope (earnings) 07/88: nope 08/99: Tue (20% each way in two days!) Summary: 17 events 8 times it didn't happen 0 Wednesday 1 Thursday 0 Friday (doh!) 5 Monday (ah!) 3 Tuesday 0 Wednesday FWIW, the 7/98-9/98 period was a pretty good market-wide drop. The percentage of boomerangs when you're not in a sustained "market correction" rises from about 9/17 to 9/14. For MU specifically, note that two out of five earnings reports featured "the boomerang", and those were both 20% boomerangs. (Note that the year-end report didn't do it at all.) Fine in hindsight, but have there been there big drops like we just had that just keep on going? There were only two such periods: 8/98 and 2/99. (The bottom was expiration day itself.) So much for holding a put at expiraton! The six other periods didn't have a 10% drop into any part of the Thu-Tue time period. Thus, 9 out of 11 times when there was a 10% drop into the Thu/Tue pre-expiration period, it rocketed right back up. The current situation: - 12% drop into Thursday before expiration (82 1/2 to 73 1/8) - it's earnings time That combination is somewhere between 2-for-2 (although it suggests a 20% drop) and 9-for-11, and that's good enough for me. Whether we figure it's a 10% normal expiration boomerang instead of a 20% earnings-time boomerang, we'd be back to yesterday's 82+ by next Tue/Wed. Next week's toutfest and the a new product announcement would seem to fit right in, huh! Frightening.

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