This Sector Will Continue To Yield The Best Trades
One of the hottest sectors in the last few months has been Semiconductors.
If the market continues higher, there will be more big trades in this sector.
Today’s trade idea is a stock that is set up to buy on strength or weakness.
The chart below is Micron Technology (MU).
As you can see, MU has had a strong move since it bottomed in June. It has also cleared significant resistance at the $44-$45 level. This is now likely to be good support.
As a result, if the market pulls MU down to $44.50, this would be a good buy point. The buy zone is really from around $44.50 down to $43. That area should be good support.
The stop for the entry is under the pullback low from July 17th of $42.60. This is the last swing low before the breakout, and therefore the trade should stop out under $42.50.
In addition, MU has a trade setup if it doesn’t continue to sell-off.
If MU resumes its uptrend immediately, then a move over $47.60 is a buy trigger.
This trade is a bet that the current flag in MU and in the sector is finished and the next leg up in the trend has begun.
The stop on this trade is the low of the flag, which is currently $45.85 so I’d put the stop under $45.50.
With the Fed meeting this Thursday, it’s likely that the market could experience some volatile days this week. If you’re not comfortable with volatility, it may make sense to hold off on taking any new positions before Friday.
Rick Nartarian, Chief Investment Officer
The American Investor Daily