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Skyworks, Micron, Nvidia Still Struggle, Bitcoin Reversal Pattern, Tesla
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Chips Still Struggle
Chip stocks just continue to melt, and I’m at this point I’m no longer sure what the driving force behind this melt is, as it seems completely overdone. When looking at shares of Apple supplier Skyworks ($SWKS), the stock had now fallen nearly 19 percent since November 6, when it reported results that beat estimates and gave solid guidance. Shares are currently trading at less than 12 one-year forward fiscal 2019 earnings estimates of $7.98.
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If the problem is Apple related, then it inevitably hasn’t been reflected in Apple’s stock, because those shares are only down by 1 percent during the same period. Broadcom, another Apple supplier, is down 6.7 percent. But Cirrus Logic and Qorvo two more suppliers have also been slammed, 14 and 17 percent respectively.
But the problem may very well be Apple related, just not on the supply side. Reports have floated for some time that Apple may be about to cut off its second supplier of chips in Dialog Semi. The shares of Dialog Semi have fallen from 44.09EU to 24EU since November 6, a decline of almost 41 percent since November 6. So why are the chips like Skyworks and the smaller suppliers getting crushed? Look at Dialog.
I had written a pretty detailed piece on December 7 for Investopedia, going through this, and the potential fall out. Skyworks and Qorvo have done an excellent job over the years diversifying their revenue streams, but still, have more work to do.
At this point, if Skyworks trades below $94, it seems obvious the next stop is likely on towards filling the gap, in the low to mid-80’s. It would surely be a disappointing finish to what had been a strong year. But the market needs to play this game and will need to sort this out, and it will.
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Micron
Micron continues to trade terribly, and can’t seem to hold any gains, even on a day when it gets an excellent commentary out of Morgan Stanley reiterating a buy and $55 price target. It tells of a stock that sellers are just taking advantage of any uptick to pounded it lower, and it means the stock is likely not done going lower.
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Nvidia
Nvidia is in the same boat as Micron, the bulls may not want to admit it, but stocks that were once might high flyers that can’t mount a meaningful bid, means their wings have been clipped and likely headed lower.
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Tesla
Tesla is a zero according to interview with Jim Chanos on CNBC today. So most would know that I very much disagree with this viewpoint. In fact, I think it may be misguided on his part to believe it is a zero. Tesla has seen relatively high demand all year-long, while many of the high-end luxury automakers have struggled. Additionally, there are reports that Tesla’s Model 3 production is now nearing the 5,000 cars per week according to suppliers.
Remember Tencent took a 5 percent stake in Tesla this year, while there are plenty of other famed investors that would gladly take the other side of Chanos. Short selling is not easy, so I give him credit for being short for so long, considering the cost to borrow shares as well.
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Biotech
It seems like the IBB goes up and down by one percent now on a daily basis, and I’m beginning to think that splitting the shares 3:1 did nothing but increase the trading and the vol. The IBB ETF has now failed at $107 on three occasions, recently.
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What do you think about this next chart? Does it make you want to run and buy it?
Bitcoin
If you don’t know what it is, it is Bitcoin. I simply am not smart enough to understand what is going on here. Because when I look at Bitcoin, all I can see is a “currency” with no government backings, with nothing standing behind its value. $100 is worth $100 because it has the full faith and credit of the US government standing behind it. What stands behind the value of Bitcoin? Currency is worth something because it has the backing of a Government.
I will take a stab at this tonight, because quite frankly I’m bored, and because I’m tired of covering the same things.  Again I’m not expert in Bitcoin, nor do I wish to become one. I am merely reading this like I would any other chart. That formation I circled in green below, I just do not like and looks very much like a head and shoulders, which means Bitcoin could be headed lower, and if I had to guess I’d say to $13,000 is likely the next stop.
Additionally, we can see the rise in the price from 11,000 to 17,000 the first time around came on higher and higher levels of volume. The more recent surge came on declining volume, while the relative strength index has fallen as well. A bearish sign as well.
Take it for what it is worth.
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Night!
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Michael Kramer and the Clients of Mott Capital own shares of $TSLA $SWKS
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Tags: #technology #chips #skyworks #nvidia #micron #bitcoin #tesla #broadcom #apple
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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