micron

Trouble Brewing For Micron? Plus Nvidia, Acadia, Visa, MasterCard, Altria

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

Otherwise, enjoy the column!

Subscribe to the Monster Stock Market Commentary and join the 2,529 subscribers getting it for FREE every day!

Trouble Brewing For Micron? Plus Nvidia, Acadia, Visa, MasterCard, Altria

Parts of the market continue to perform, while other parts are continuing to struggle. The chip stocks Nvidia, Micron, and just continue to come under tremendous pressure, and what had been stellar years are beginning to become, well mortal.

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”][/vc_column][/vc_row] Join our 2,529 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe

AVGO Chart

AVGO data by YCharts

[widget id=”wordads_sidebar_widget-18″]

Nvidia Shares

Nvidia’s trading pattern just continues to deteriorate and for now seems to point to a stock that could continue heading lower. The next level of concern should come around $175, from there it is a long way down.

[widget id=”wordads_sidebar_widget-18″]

Micron

Micron shares attempted to rally, but failed to break resistance at $45 and have turned lower. What seems startling as we continue to look more closely at this name, is how earnings estimates are expected to fall over the next three years.

micron chips nvidia

As the chart below shows estimates are expected to fall from 7.98 in fiscal 2018, to $6.79 in 2019, and $6.21 in 2020.

MU EPS Estimates for 2 Fiscal Years Ahead Chart

MU EPS Estimates for 2 Fiscal Years Ahead data by YCharts

[widget id=”wordads_sidebar_widget-18″]

While revenue estimates show flat revenue growth over the next three years, which proves problematic for the stock going forward. No revenue growth plus earnings contraction equal margin deterioration. 2017 has been a good year for Micron and margin expansion, should it go the other way it could foretell further declines in the stocks. Look at the correlation between gross profit margins and the stock price.

MU Gross Profit Margin (Quarterly) Chart

MU Gross Profit Margin (Quarterly) data by YCharts

Interesting for sure.

[widget id=”wordads_sidebar_widget-18″]

Visa and MasterCard

Another set of stocks like Visa and MasterCard, which got slammed before have not only bounced back but are now higher than they were before the steep sell-off on December 4.

V Chart visa

V data by YCharts

[widget id=”wordads_sidebar_widget-18″]

A tale of two tapes, What does it mean? Not sure, it could be year-end profit taking or shorts that are starting to pile into the chip stock. Nvidia and Micron have seen an uptick in short interest recently.

NVDA Short Interest Chart

NVDA Short Interest data by YCharts

[widget id=”wordads_sidebar_widget-18″]

Altria

Talk about a comeback story, but have you noticed shares of Altria recently? It was crushed in the mid-summer, falling from $74 to under $61, and now they are back to $72. It shows how irrational the market can be at times, and why panic selling isn’t always the right thing to do.

altria

The FDA had purposed changing the rules around nicotine levels in cigarettes, and the stock tanked. But any change to the regulations would likely take years to happen if it ever happened. So now, the stock is rising as reality comes back to the market’s sense.

[widget id=”wordads_sidebar_widget-18″]

Acadia And The ETF’s

Lastly, behold the effects of index funds and ETFs, the subject Acadia Pharmaceuticals. When you look at the chart of the IWM, the ETF for Russell 2000, and Acadia stock price, you don’t see much.

ACAD Chart acadia

ACAD data by YCharts

But when you do it as a ratio, it looks like the chart below. What is most fascinating is that the IWM has risen by nearly 32 percent over the past three years, while Acadia is down about 8 percent. But when Acadia falls, it stays at a ratio of nearly 5.25 to the ETF.

Fundamental Chart Chart

Fundamental Chart data by YCharts

The same happens when compared to the IBB.

Fundamental Chart Chart

Fundamental Chart data by YCharts

[widget id=”wordads_sidebar_widget-18″]

Interesting for sure, it tells us that sometimes stocks go up and down for no reason other than because ETF’s or indexes are going up and down. It is important to remember that when ETF are falling in price the underlying stocks that make up the basket of shares in the ETF are also being sold, and when ETF rise, they are buying the stocks in the basket.

In this case, we can see the effects because Acadia is very tightly held for the most part, with the Baker Brother and Fidelity owning nearly 35 percent of the shares, while index funds for Vanguard and Blackrock own another 11 percent.

Even more, the Biotech ETF ($XBI) owns 2.2 percent of Acadia shares, while the iShares Nasdaq Biotech Fund ($IBB) own 1.36 percent of shares.

Which way will Acadia go from here? Just watch the IWM and IBB and multiple or divide, it could be just that easy. That’s if you aren’t investing in it for the long-term.

Night…

[widget id=”wordads_sidebar_widget-18″]


Sign-up for our premium content on Seeking Alpha Market Place – “Reading The Markets” and a get Two Week Free Trial Period

Premium Content: Benefits include the ability to reach out to Mike with questions through a chat room, direct message, or comments.

We will respond to questions in short order and will respond to questions with full-post or video segment, just not one or two-word answers.

Just $40 per Month

Why The FANG’s Could Lead In 2018

Tech Wreck V12.4.17 – More Room Too Fall

Machines Break Loose

Why Tesla Could Double, And Nvidia Could Get Cut In Half

Why The S&P500 Could Melt-Up Into Year End

S&P 500 Breakout- 2700?

Nailing The Biotech Breakout

 


[widget id=”wordads_sidebar_widget-18″]

Watch my interview with Cheddar

Top 3 Predictions for the 2018 Market

Seeking Alpha Author Michael Kramer joins Cheddar to give his top three predictions for 2018 market trends. The first one: Tesla will hit a $100 billion market cap! He explains why he’s comparing the auto company to Amazon in his analysis and prediction.

[widget id=”wordads_sidebar_widget-18″]

Free Articles Written By Mike:

Why Starbucks Is Poised To Rise Over 20% In 2018

IBM’s Stock May Rise 10% In Short-Term Rally

Nvidia’s 11% Plunge May Be Just the Start

Why Qualcomm May Have To Pay 20% or More For NXP

Facebook Shares May Rise 20%, Options Trades Indicate

These 2 Suppliers Can Survive Without Apple

FANGs Are Cheaper Than Soda and Burger Stocks

Why Visa and MasterCard May Have Fallen Too Far

Biotech Stocks May See a New M&A Wave in 2018

Why Tesla’s Stock Could Rally Into Yearend

Disney’s Stock Advance Could Be Just The Beginning

Netflix Shares Could Be Headed Lower

We offer a lot of great commentaries all week talking about the major and relevant market events. Be sure to subscribe to get all our free commentaries sent directly to your inbox or follow us on Twitter.

Join our 2,529 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe

-OR-

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column][vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”][/vc_column][/vc_row]

Photo Credit Via Flickr

Michael Kramer and the Clients of Mott Capital own shares of $ACAD $MA $V $MO

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.

© 2017 Mott Capital Management, LLC. Use, publication or reproduction in any media prohibited without the permission of the copyright holder.

Tags: #technology #biotech #ACADIA #MASTERCARD #VISA #MICRON #NVIDIA #ALTRIA #ETF #CHIPS #STOCKS