Summary & Discussion of My Trading History of Micron Technology (MU) in 1998 Based on the Triangle Pattern

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New World Technologies, Inc.
www.nwtai.com

Michael Fouche
mfouche@nwtai.com
michael.fouche2017@protonmail.com

Table of Contents

Introduction. 3

MU Trading Executive Summary. 4

Discussion, Charts, & Discussion. 5

Original Return on Investment. 6

Round 1. 6

Round 2. 8

Alternative Return on Investment. 10

Round 1. 10

Round 2. 11

Conclusions. 12

Appendix – Round 1 Transaction Receipts. 13

Appendix – Round 2 Transaction Receipts. 14

 

 

 

 

 

 

 

 

 

 


 

Introduction

 

In 1989 I was introduced to Ted Warren’s book, “How to Make the Stock Market make Money for You” (originally published in 1966) – his claim was that one could discern specific patterns in stock histories to predict future performance (this is also called “Technical Analysis”).

In order to validate his claims, I studied many stock charts from the local library in 1990 – interestingly I found that the same type of patterns that Warren had used as examples from the 1950s and 1960s, were also present in the stocks that I’d studied from the 1970s and 1980s. 

Thus the next step was to begin investing - which is where the “rubber meets the road” so to speak, using the techniques that he had described in this book. 


During the early, mid, and late 1990s, I was successful for the most part, in selecting and investing in good stocks based on specific patterns – my primary downfall was in not being patient enough to wait for the stock to meet its full potential.

This document discusses the details of one of thirty documented stock investments which were made based on the patterns discerned from that particular historical stock profile.


 

MU Trading Executive Summary


The following is a synopsis for these stock investments (two separate rounds). 

Return on Investment (ROI)

Round 1: 13.3% in 1 month - Round 2: 47.3% in 1 month

 

 

Potential ROI if I’d been patient

Round 1: 687.2% - Round 2: 704.3% within 2 years

 

 

Reason for Purchase

Classic triangle pattern

 

 

Time Frame When Purchased

1998

 

The next two sections include more details on the reasons for the trade, the trading history, and the maximum potential ROI. 

Copies of the original stock transaction receipts, for each of the trades (buy and sell), are included in the appendix at the end of this document.

 

 


 

Discussion, Charts, & Discussion


I studied stock charts obtained from the internet – in this case it appeared that MU was following the classic triangle pattern as shown below in Figure 1. 

 

 

Figure 1 – Classic Triangle Pattern Formation

 


 

Original Return on Investment

I invested in the stock two different times – thus there was “Round 1” and “Round 2”.

 

Round 1

 

I purchased the stock in June of 1998 and sold it a month later in July with a 13.3% ROI.  The stock chart with the buy and sell points is shown below in Figure 1.

 

 

Figure 1 – Observed Pattern, and Buy / Sell History

 

 

 

 

 

 

The transaction summary for this investment is shown below in Figure 2.  Note that this does not account for transaction costs.

 

 

Figure 2 – Transaction Summary

 

 

 

 

 

 


 

Round 2

 

I purchased the stock in September of 1998 and sold it almost a month later with a 47.3% ROI.  The stock charts (two timelines) with the buy and sell points are shown below in Figure 3.  Note that later on there was a stock split and thus the difference between the scaling in the chart on the left and the chart on the right.  It was a 2-for-1 stock split – so my original pre-split purchase price of $23.00 became $11.50 post-split.

 

 

Figure 3 – Observed Pattern, and Buy / Sell History

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The transaction summary for this investment is shown below in Figure 4.  Note that this does not account for transaction costs.



 

Figure 4 – Transaction Summary

 

 

 

 

 

 

 

 

 


 

Alternative Return on Investment

 

There was still a lot of upside to this stock – from the time of purchase, the stock increased in value by 687.2% in 26 months for Round 1 and 704.3% in 23 months for Round 2.

Round 1

 

While I sold out with an acceptable 13.3% ROI in 1 month, I left a lot on the table since the total upside potential was 687.2% over the next two years, which left plenty of room to sell out at several hundred percent ROI comfortably.  The point is that this triangle pattern successfully predicted that MU would be a high-performing stock.

A projected transaction summary of the “maximum projected ROI” of 687.2% (assuming that I’d sold out at the maximum ROI percentage) is shown below in Figure 5.  Note that this does not account for transaction costs.

 

Figure 5 – Projected Transaction Summary

 

 

 

 

 

 

 

 

 

Round 2

 

The performance was much better in this round with a 47.3% ROI in 1 month.  However, as with the first round, I left a lot on the table since the total upside potential was 704.3%, which left plenty of room to sell out at several hundred percent ROI comfortably. 

A projected transaction summary of the “maximum projected ROI” of 704.3% (assuming that I’d sold out at the maximum ROI percentage) is shown below in Figure 6.  Note that this does not account for transaction costs.

 

Figure 6 – Projected Transaction Summary

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Conclusions

 

This was a “perfect” triangle pattern and I decided to buy in at the vertex of the triangle – expecting that this could be the beginning of the long-term upward movement.  In some cases, there are “false breakouts” which means that the stock will go up for a while, and then retreat back down, only to later demonstrate the genuine profitable rise.  In this case, it was a good decision to get in at this point – however, I left a lot on the table – had I stayed in longer, over a period of another couple of years, the ROI could easily have been several hundred percent up to 687.2% with the first round and 704.3% in the second round.

As was typical with most of my investment experiments, patience was my weakness.  Nonetheless, most of the selections, based on recognized patterns in the historical profiles, were good – and patience would have provided much higher returns.


 

Appendix – Round 1 Transaction Receipts


The records of the purchase and sell transactions for Round 1 are shown below.

 

 

Stock Purchase Receipt

 

 

Stock Sell Receipt

Appendix – Round 2 Transaction Receipts

The records of the purchase and sell transactions for Round 2 are shown below.

 

Stock Purchase Receipt

 

 

Stock Sell Receipt