Fundamentals And Technicals Converge
Often technical traders who play short-term moves
thumb their noses at earnings reports and other types of fundamental news.
Whereas they acknowledge that the business performance
of a company is important for intermediate-term traders, they believe that the
short-term trend is purely technical. But there is a lesson to be learned in
today’s action in Micron Technology.
After trading as high as 93 7/16 on August 24, shares
of Micron nose-dived throughout the month of September and traded last week as
low as 57 7/16 on Friday.
What a difference two days make; the stock rose Tuesday 6 15/16 to 65 7/16
after three analysts raised their ratings on the Boise, Idaho-based DRAM chip
maker. Micron helped the SOX post an impressive 8.2% gain on Tuesday.
It’s interesting how large moves that coincide with fundamental news often do
so in conjunction with technical factors. Tuesday’s move occurred off MU’s
200-day moving average and a downsloping trendline on nearly 200% average daily
volume.
The important thing to point out here is that short-term traders can benefit
tremendously by be aware of the big picture both in terms of a stocks technical
and fundamental outlook.
Eddie Kwong
Loren Fleckenstein is on vacation and will return Wednesday October 20th.