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A Technical View of the Micron Technology, Inc. (NASDAQ:MU) Chart

Micron Technology, Inc. (NASDAQ:MU) is a very interesting technical picture right now, and technicals may well drive the action right now given the mixed guidance and the highly contentious picture we see for the chip and hardware space and the fact that the company is basically in the middle of the desert of fundamental inputs, with its next quarterly report not until December 19 and the last one nearly two months ago.

The technical picture, then, may be the most important guide for traders of the stock right now.

Micron Technology, Inc. (NASDAQ:MU) solidified its key pivot support late last month, with the rest of the market, when it bounced off the $35 level and immediately popped back up to test the $40 area – which is by far the most important level on this chart.

Everything coalesces around $40 for MU right now. It has the psychological round-number impact, which is the first factor. If you don’t think that’s important, I would invite you to consider a study done by Thomas Schelling, the Nobel-winning game theorist, back in 1960. This was a focus of his research and subsequent publications, and was on something he called “focal points”.

Let’s say you know you have to meet a stranger in your city sometime tomorrow. The only problem is that neither of you can communicate in advance about when or where to meet. You would just have to show up somewhere at some time, and it would have to be the same place at the same time as a specific person you had never met before, knowing that this person was also trying to happen upon you in the same way.

The amazing thing Schelling found was that people did a good job of this. They picked the most obvious place and time. This was at NYU. So they tended to pick “under the main clock at Grand Central Station at Noon”. It’s the most obvious place and the most obvious time.

Major chart levels work something like this as well. It’s a crowd phenomenon and is intimately tied to the common knowledge game theory dynamic — the infinitely nested loop of “I know that you know that I know that you know that” etc.

$40 has become that meeting place for MU at this point. The stock has found key support there 3 times in the past year and now is finding key resistance there. The big challenge – and the big “tell” – will be if the stock can pop up through the level next week.

However, if it does, it will very quickly be confronted with a key test of its 50-day simple moving average as well – another major technical level of resistance.

 

Satellite Imagery

Micron Technology, Inc. (NASDAQ:MU) is, as the reader is likely no doubt aware, probably the most important DRAM play. Dynamic random-access memory (DRAM) is a foundational semiconductor memory form that stores each bit of data in a separate tiny capacitor within an integrated circuit. This is a straight binary process.

The company also provides NAND products, which are electrically re-writeable, non-volatile semiconductor memory, and storage devices. Between the two (DRAM and NAND), the company is a central weather gauge for the memory cycles that underlie a lot of the technology sector business cycle. So, it’s an extremely important stock to understand and follow – probably more than most people really understand.

In addition, Micron and Intel have been collaborating in a JV project called IM Flash Technologies that is primarily centered around developing and operationalzing 3D XPoint technology.

According to company materials, “3D XPoint technology is an entirely new class of nonvolatile memory that can help turn immense amounts of data into valuable information in real time. With up to 1,000 times lower latency and exponentially greater endurance than NAND, 3D XPoint technology can deliver game-changing performance for big data applications and transactional workloads. Its ability to enable high-speed, high-capacity data storage close to the processor creates new possibilities for system architects and promises to enable entirely new applications.”

Micron recently bought out the partnership from INTC and plans to implement the tech in 2019.

Micron Technology, Inc. (NASDAQ:MU) pulled in sales of $8.4B in its last reported quarterly financials, representing top line growth of 37.5%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($6.8B against $5.8B).

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