For the better part of last year, yours truly here encouraged investors to be buyers of Micron Technology, Inc. (NASDAQ:MU).

Though at the time, MU stock look and felt overbought against a backdrop of concerns about overproduction of memory chips, the stock was still trading at a P/E ratio in the single digits, and DRAM (memory) prices continued to trend higher despite the fact they “weren’t supposed to.”

It’s a call that’s paid off, too. Micron shares reached a multiyear high just a couple of days ago. Investors haven’t been this in love with the stock in a long, long time.

Now get out.

That’s a stance apt to be as unpopular as my bullishness was a few months ago, but as I’ve explained several times in the meantime, this isn’t a trade based on fundamentals and valuation. This is a trade based on perception and presumption. That perception is about to take a hit, if it hasn’t already.

Guilt by Implication

With a trailing P/E of 9.8 and a forward-looking P/E of 5.8, there’s no denying the value-based bullish argument holds water. Indeed, next year’s projected earnings could roll in at half of what’s currently expected, and the value argument is still valid.

That’s not how MU stock trades, however. More than anything else, Micron shares are a means of speculating on the future prices of NAND (“flash”) and DRAM (“volatile”) memory.

The industry’s key players, which also consist of Samsung Electronics Co Ltd (OTCMKTS:SSNLF) and SK Hynix, haven’t exactly been disciplined in the past. When memory prices soared, these players tended to ramp up production far too much, creating a price-killing glut.

That was the worry for the better part of last year, too. But, much to the market’s surprise, memory prices just kept on rising, and no glut ever materialized.

Perhaps now we know why. Just a few days ago, China’s antitrust regulators “talked” to Micron’s chiefs to discuss why NAND and DRAM prices continued to edge higher for as long as they have.

It’s not an accusation. But, it doesn’t have to be. The implication — the mere act of planting the seeds of an idea — are enough to rattle traders’ psyches. Perhaps the long era of rampant price increases is indeed winding down.

MU Stock Downgraded

With or without any substance to the concerns that the three-way monopoly may soon be collapsing, the memory market appears to be changing. Even among the big-three suppliers, each has progressively (albeit gradually) ramped up output in a quest to take a little more market share, finally resulting in a degree of supply that creates price-based competition.

There are two pieces of evidence to that end. One is, DRAM prices haven’t really budged since November, while NAND prices have been drifting lower for over a year now.

Morgan Stanley expressed the second layer of evidence with a downgrade of MU stock, from “Overweight” to “Equal-weight,” with analyst Joseph Moore explaining:

“After being bullish on memory for the last two years, we are moving to a neutral stance. DRAM remains strong but looks priced in as MU is very close to our PT. We would rather err on the side of caution in an environment where we can see storm clouds on the horizon.”

There’s more to the call than a gut feeling, though. Moore, who talks to industry insiders on a regular basis, also noted that would-be buyers of memory chips aren’t scrambling to find memory or fighting for better prices as much as they were just a few months ago.

Manufacturers, and cloud computing center managers in particular, say they’re finding what they need, and in some cases have postponed planned purchases of memory chips.

This sentiment jibes with the stabilization of DRAM prices over the course of the past few months. More than that, it helps foster fear and doubt that will replicate and recycle itself.

The Last Word on MU Stock

Again, don’t take it too personally if you’re still a fan or owner of MU stock. I am, too. It’s dirt cheap, and even if DRAM prices only tread water going forward, they’re treading water at levels that will keep Micron plenty profitable.

And, the need for memory is at least going to be sustained as the world continues to become more cloud-centric. The ongoing advent of the Internet of Things will only fan those flames.

As was also explained, though, like Tesla Inc (NASDAQ:TSLA) and General Electric Company (NYSE:GE) (right now anyway), past and projected fundamentals aren’t at the heart of what’s pushing the stock around. It’s the underlying story, backdrop and chatter. And right now, those things are building up a bearish headwind.

Welcome to the game of trading.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @jbrumley.