Micron Takes a Hit after Morgan Stanley Warns on Demand


 
 
12:01 09/06/2018

One of the best technical indicators to always include is Williams’ %R (W%R).

W%R is the ultimate momentum indicator that signals oversold and overbought conditions. If it moves to or above its 20-line, the asset is considered overbought.

If it moves to or below its 80 line, the asset is considered oversold.

And it’s had great accuracy.

Look at Micron Technology MU  for example.

Notice what happens to the stock about 80% of the time when W%R jumps above its 20-line. Not long after the stock pivots. Now, look at what happens to the stock when W%R dives below its 80-line. The stock begins to pivot higher.

Before the $5 sell-off in the stock today, W%R was above that 20-line.

Granted, there is no such thing as a perfect indicator, or 100% success. But if you can spot where pivots are likely to happen, you increase your odds of success.

Plus, make sure you never rely on just one indicator. Be sure to draw your trend lines. Here, our trend lines show us a descending channel. Should the stock break below the lower blue line, an argument could be made for a potential test of support around 40.

You can even use Bollinger Bands (2,20), MACD, RSI, and Money Flow (MFI).



It didn’t help Micron that Morgan Stanley just warned.

Semiconductor stocks took a hit after Morgan Stanley warned that memory chip demand is deteriorating versus expectations.

According to the firm, as quoted by CNBC, “Memory markets have worsened in recent weeks. For DRAM [memory chip], demand is weakening, inventory and pricing pressures are building, and vendors are struggling to move bits," Morgan Stanley analyst Shawn Kim said in a note to clients Thursday. "In NAND [flash memory], there is just too much supply. Earnings risks are emerging from 3Q and our cautious view on memory is playing out."


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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