Don't throw in the towel on Micron.
As Micron Technology (MU) stock was hit by a news event, and as other semiconductor names have been suffering with trade tariff expectations, I thought it was a good time to revisit my panic point in this name. My panic point, and point of replenishment, for Micron had been $52. The level had been flirted with last week, but by Tuesday morning, one might have thought that Micron was out of the woods.
Then came news that a Chinese court had ruled against the firm in a patent infringement case brought by Taiwan's United Microelectronics (UMC) . This ruling forced a drop in the share price of MU from a high of $54.79 to a low of $50.10 in Tuesday's shortened regular session. The shares closed at $51.48, and are trading around $51 this morning.
The problem is that the Fuzhou Intermediate People's Court of the People's Republic of China has barred Micron from selling particular DRAM and NAND chips in China, and that China accounts for about half of Micron's revenue. The oddity of this news was that it was released by United Microelectronics on Tuesday. Micron, at the time, was left waiting on official documentation from the court, unable to comment.
Yes, we have a broken Pitchfork on our hands caused by a news event. There is some possibility that MU has become a political football. Yes, I (we) had the chance to sell some at better prices. Still, most of us are likely playing with varying levels of profit on this one, unless one entered the name in the short term.
I can't tell you what to do, but I can tell you what I am going to do. Being that I was out of the loop, and missed the sell signal on Tuesday, I am dropping my panic point to $51. The stock opens below that spot, I puke 25% of my holdings. See that 20-day simple moving average that has held all year (around $48)? That's where I sell another 25%, if I have to. My goal? To buy these shares back, of course. But where?
See that $45 level? That spot served as support in early May, and twice as resistance around the new year. My guess is that the algos will see that too. The stock holds above $51? Then I sit on my hands. But with trade-related news imminent by tomorrow, I am not holding my breath.
Here's another idea. The firm reports next on September 19. That's a long way off. Late Tuesday, options markets were still paying $1.57 for September 21 $60 calls. If one can still get $1.35 or so for those this morning, I think the sale of covered calls could come in pretty handy as far as reducing basis here, or you could whine about your predicament. Hey, just a kid with an idea.
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