Greg, I will tell you my reasons for not trading MU on the upside. I've been investing for over 30 years and I know I am going to have any number of losers in my picks, long, short and neutral. However, I don't like to be long the stock of companies I think are lousy cos. or short the stock of cos. I think are great cos. That would basically be second-guessing myself and the research/valuation work I do. I do go long calls and long puts sometimes in these situations when I think the stocks are undervalued, though crappy, or overpriced, though good (HWP, AMAT, and TLAB are examples of this type of long put where I think the co. is good but too pricey). But MU does not fit any rational dividend discount model as undervalued, so the fact that it has patterns of sharp rallies does not attract me. Patterns can be broken and they can be broken big time, as the notes on this thread about Ciena and Tellabs illustrate. It is bad enough to lose money, but worse to lose money second-guessing your own research.
My feeling about MU, in particular, is that it is being manipulated, but even the permabulls will run away after they realize that the real deterioration at this company will become visible to even the most myopic. When they do, they are likely to preface their desertion by running the stock up a bit to sucker folks in. That is what they did when it was in the 80s. They ran it to the 90s before taking it down to $17, and there were a score of other bull traps in between. The patterns in the 70s, 60s, etc., and especially those in the rallies from the 30s to the 40s, were every bit as frequent as the current 20s to 30s game. The current pattern of the stock is relatively short term in the long term decline of this stock and the trick, again, IMHO, is to not be hurt when it gaps down and to have some puts in place when it gets to its true valuation on its business prospects, or, about $6 per share.
Good Luck,
MB |
