Bulkowski's Micron Technology Trading Quiz

The head-and-shoulders bottom broke out upward as the above picture shows. On July 12, a broker upgraded the stock from hold to buy, but the stock closed up only 9 cents. Bad reception to an earnings announcement sent prices lower forming the right shoulder.

Note: Weekly chart.

Here's notes from the time I was considering placing the trade.

"My gut feeling is that the stock will curl around in a throwback. When it begins moving up after that, then it's a buy for the longer term. A trendline drawn from the high on the [prior] chart [which I show here in red] downward using the 1-2-3 trend change method I outlined in my book Trading Classic Chart Patterns (page 22) and in Trader Vic - Methods of a Wall Street Master also suggests a trend change has occurred. The line follows the peaks and bottoms slightly above the right shoulder low.

"Here we can still see the head-and-shoulders but now we also see a rounding turn. It's not as rounded as I like to see but I think the shape suggests price has bottomed."

The stock signaled a buy when price closed above the blue, down-sloping neckline. A throwback attempt was made but it took longer than a month, so it doesn't count. The big news is I didn't take the trade. I checked my notebook and there was no entry explaining why. Looks like a missed a good trade.