Micron’s Massive Breakout, Plus Skyworks, Lam, Biogen, Alnylam & More
The stock market was mixed on Monday, with the S&P 500 finishing the day down slightly. Technology and Biotechnology continue to be the best performing sectors in the market, with the Nasdaq Biotech IBB rising by 40 bps, and the Technology ETF XLK rising by 45 bps. The semiconductor ETF SOXX was the best performing group up another over 1 percent.
Micron’s stock was the most prominent winner up by nearly 9 percent, with the stock eclipsing the $58 technical level we had been targeting for some time. The move higher came after Nomura raised its price target on the stock to amazing $100, nearly doubling its previous target of $55. Meanwhile, Evercore upgraded the stock to $80 from $60.
If you are a Micron bull, then the good news, is the next resistance level comes somewhere around $68.
Option volume was also very bullish today as well, with nearly 41,000 call contracts trading at the $55 strike price, an implies a breakeven price of nearly $62. Meanwhile, 30,000 calls contracts traded at the $60, and implies a breakeven price of nearly $64.
Skyworks has quietly worked its way back to nearly an all-time high. So much for the Apple supercycle issues. That is likely because Skyworks continues to diversify its customers away from Apple and continues to drive earnings and revenue growth.
Lam Research broke out, rising above its previous high, on surging volume. Could shares climb all the way to $250? It doesn’t seem outside of the realm of possibility.
Biogen shares better find a bounce or the final nail may be put in the coffin of this stock. The stock sits on it technical support level around $280, and should this break below $275; it is likely headed another 11 percent lower, towards $250.
Shares of Alnylam broke out today, crossing above $139.50 its previous all-time high.
If the old guard biotechs aren’t going to lead the group higher, other companies are going to have to pick up the slack. Today it was Alnylam, Alkermes, and Seattle Genetics turn.
Alkermes has been floating above and below the $60 mark for some time, and it will be interesting to see if the stock can finally pull away to the upside. There is only a little bit of open interest at the May 2018 calls at the $60 strike price, with 1,700 contracts open. The calls cost about $5.00 bucks It is small bet, with a notional value of approximately $1.0 million, but the options are expensive with an implied volatility of nearly 48 percent. The stock would have to rise to about $65 to break even.
Seattle Genetics is either close to a massive breakout or colossal breakdown. It looks a like a symmetrical triangle in the chart, and that would suggest a continuation of the prior uptrend. A Rise above $60 could bring the breakout.
Charter, the cable company, is a new one for us to explore and was one of the better consumer discretionary names today. The chart has a strong set-up. We will have to keep an eye.
Mott Capital’s Reading The Markets – An In-depth Global Macro Stock Market Commentary – In Video Format – See How Michael Dissects The Markets
Free Articles Written By Mike:
Join our 611 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe
[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]
Michael Kramer and the clients of Mott Capital own shares of SWKS, ALKS
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
© 2018 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.