Channeling Stocks

[JLS]

More on MU July Buy-Writes:

Micron’s Elpedia acquisition closed on July 31. This was a great deal for Micron, as they negotiated the purchase of the company for pennies on the dollar early last year during the worst-ever memory market, when 2Gb DRAM was selling for $0.82. Since the purchase negotiations were completed, the price of commodity 2Gb DRAM has risen to $1.62.

So with today’s MU price move (on a bad day for the majority of the rest of the market), shown as that large green candle breaking above a triangle pattern, I Bought to Close both 8/23 $14.50 Covered Calls for a small profit. I’m expecting price to break through the top of the horizontal channel defined by the red and green lines when the rest of the market resumes its upward trend. Prior to the test of the green line at the end of June, there was no trading above that resistance line since 2006 so I expect resistance to be weak and for Micron to trade considerably higher once it breaks through.