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Why Micron Fell and Faces An Even Steeper Decline – The Daily Rundown
Michael Kramer and the clients of Mott Capital own shares of CELG and AAPL
The technology sector got hit pretty hard again, with the NASDAQ more than 1 percent at one point during the day. The good news is the index bounce along the uptrend.
There may not have been a tech stock hit harder today than Micron. The stock got some negative commentary out of Baird this morning, noting peak gross margins, while DRAM prices may be peaking, and an oversupply in NAND. I have talked about Micron and its low valuation over and over and over. We have spoken about Micron being a gross margin story. If gross margins are peaking and heading lower, then so too is this stock. I know we focus a lot on the technical charts and that is because there is so much emotion in the stock, so technicals matter a great deal. But the gross margins and fundamentals of the business have always been a source of concern for me. That has still not changed. The low valuation has also served as evidence of the skepticism in the stock by investors as well.
So the big questions is where does the stock go now? I do not think the selling is over. A bit of a turn around from my thoughts the other day, when I thought shares might rise. But if we focus on the short-term, at least through earnings, the stock could see prices around $42.
Apple fell hard too, but then again Apple has been up a bunch the last few weeks. I could see the stock falling to around $215, should the uptrend around $222 not hold.
Even AMD fell a bit today. Held support around $27.85. I’m done predicting where this thing goes. I can’t get it right. I have probably gotten it right 1 or 2 times out of my last ten attempts. I’m guessing, but that is what it feels like.
These biotechs have also been slaughtered the last few days. The IBB is below support. I know. It had looked like it was heading to its 2015 highs. I still think it gets there. The break out seems like it may occur at a more measured pace. The uptrend is still solidly in place.
The charts on Celgene, Regeneron, Gilead, and Biogen still look solid. The only one I have a bit of concern over now is Gilead.
The Chinese e-commerce stocks Alibaba and JD have gotten crushed, and I still think they are heading lower. JD to $25.5 and Baba to $151.
Don’t forget the big jobs reports tomorrow. ADP today came in a lighter than expected. Tomorrow will be a big day for yields. A lighter Payroll number or higher unemployment rate could be reason enough for the Fed to hold off in a few weeks from raising rates again. Watch the ten-year tomorrow. It may be a big day.
Michael Kramer is the Founder of Mott Capital and the creator of Reading the Markets.
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.
#technology #micron #amd #apple #biotech #alibaba #jd