Semiconductor company Micron Technology (MU) just announced it will cut 10% of its workforce in 2023 as it braces for revenue to drop more than 50%. Micron's revenue is not the only thing at risk of dropping next year though -- its stock price could be starting what may ultimately end up being a years-long descent.
The above yearly chart (also reproduced below) shows that Micron's price was rejected at a major resistance level.
The Stochastic RSI shows that yearly momentum is beginning to roll over from overextended levels. This is quite bearish looking.
The combination of Micron's price being rejected from a major resistance level and momentum rolling over on the yearly chart could signify that Micron is entering a period of prolonged decline.
This trend, however, is not unique to Micron. In one of my prior posts, I explain that the entire S&P 500 is at risk of further decline. (See below post for more details)
Yet, not all hope is lost. On the quarterly timeframe, Micron's price is potentially forming bullish reversal candles at the mean of its regression channel.
For those who are unfamiliar with a regression channel, it simply indicates how far above or below the mean (or average) price an asset's current price is trading. In the regression channel above, the red line is the mean price, the upper channel line is 2 standard deviations above the mean, and the lower channel line is 2 standard deviations below the mean. Unlike trendlines, price can rise above or fall below the regression channel lines and not invalidate them.
If Micron's price can find support and reverse at the mean, perhaps the long-term upward trend will continue.
Of note, Micron's price is also generally quite correlated with that of Bitcoin, as shown below.
What might Micron's nosediving revenue prediction mean for Bitcoin?
This is an outstanding post. However, I doubt MU & BTC have much to do with each other. The correlation may largely be coincidental.
SpyMasterTrades
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@SugarMuffin, Thank you! Yes, you're right, possibly no actual correlation. I think if an actual correlation exists it could be related to Micron's products being used to mine cryptocurrency. As cryptocurrency prices drop, less mining occurs and there is less demand for Micron's products.
I agree with your sentiment about the many bad actors out there. My strategy on TradingView has been to remain as objective, genuine, respectful, humble and accepting as I can be.
Yet, I should note that the biggest fault belongs to the central bank. The central bank set monetary policy conditions that aided and incentivized bad actors and caused speculative assets to form massive bubbles. But for this type of reckless monetary policy, these bad actors could not have thrived. Now, however, the tide has pulled back out, and the central bank is destroying money at the fastest rate on record. As money becomes scarce faster than ever, all the bad actors are being exposed and speculative assets are collapsing.
To reassure you, the vast majority of people have lost money this year. As the central bank makes money scarce, the price of all risk assets drop, resulting in a negative return and the perception of lost wealth. Even though I believe the situation may get worse in 2023, I should note that long-term investing still remains the best means of wealth preservation and wealth building. Specifically, I define long-term investment as making regular and consistent contributions to a well-diversified, low-fee portfolio, preferably in a tax-sheltered account, over the course of years.
To be completely honest, unlike investing, trading is rarely a wealth-building strategy over the long term. Most traders actually lose money over the long term. For those who are profitable over the long term, that profit is minimal when adjusted for taxes and margin interest. When adjusted as such, even profitable traders rarely build actual wealth from trading. What I mean by this is that even consistently profitable traders do not make money at a rate that outpaces the growth in the money supply. I think most traders do not even realize that they can make profit and yet not be building wealth. In fact, the only traders of which I am aware, that consistently make enough profit to build wealth, are… computers. Algorithmic trading strategies can calculate the risk-to-reward profile of trades and automatically execute trades in a manner that can meet this incredibly high bar for successful trading over the long term.
I always say that most people should not be trading at all. If one isn’t contributing the maximum amount allowed by law to one’s retirement account, then one should not be trading.
I think it is healthy that you have chosen to take a break. Whenever you are refreshed and ready to come back, I’ll likely still be here posting! Thanks for your comment.
wealthprophet
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Bitcoin is toast
NordicVetMBA
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Short Semis with SOXS. Up 12.5% today.
louistran_016
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now 38 is the closest support to keep the uptrend intact, only a solid close below 31 invalidates the yearly uptrend at the discussed timeframe, 100 is a weak resistance illustrating by a long wick of profit taking, the true resistance range of 39 - 46 was already broken. Fundamental speaking, Micron and Intel represents our safety net of fabrication plants in North America, even when their sales fall 90% they will be subsidied to be kept around
SpyMasterTrades
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@louistran_016, All fair points. I can see this one going either way, to be honest. I'd just point out that if Micron reached any price in the 30s at this point, it would break the uptrend on its monthly chart, as shown below.