MICRON Technology Inc. (MU.O) (d-w-m) for Monday (20180917)

Updated 9/21/2018:   Added Micron Q4’2018 (my) preliminary assessment of ER report.

See Daily Pivot Point, Support, and Resistance Section (PPt-Sup-Res) and Notes and Quotes from Micron’s SEC filings below.  The (PPt-Sup-Res) numbers will be updated every day in this blog section as we head into QW expiry Friday 9/21/2018.

Notes:  Counting DOWN …   Quadruple Witching expiry Friday (9/21/2018) is in progress.   Homework in progress and more to add.

 

Date  Open  High  Low  Close* Vol/100
9/10/2018 45.25 45.38 44.39 44.90 330783
9/11/2018 43.65 43.75 42.35 43.60 489807
9/12/2018 41.24 42.18 40.68 41.74 669160
9/13/2018 42.30 44.4948 42.30 43.62 599221
9/14/2018 44.11 44.56 43.46 44.30 406103

 

    Friday, Micron Tech (MU) closed at $44.30 up 68 cents or +1.56 percent. Year to date, Micron is up 7.73 percent.  Friday Recap: Canada NAFTA trade re-negotiations ended another week without an agreement.  President Trump’s trade comments and tweets about Canada, Japan, and especially China, sent the U.S. markets off their highs.   Micron’s Close was +$0.828 above its Pivot Point for Friday (positive). Micron’s Intraday Low was +$1.012 above its Support (s1) (positive) and was +$2.183 above its Support (s2) (positive). Micron was -$0.083 below Resistance (r1) (negative) and was -$1.106 below Resistance (r2) (negative).

Micron’s (PPt-Sup-Res) numbers for Monday’s trading: Micron’s Pivot Point is $44.107. Micron’s Support (s1) is $43.653. Micron’s Support (s2) is $43.007. Micron’s Resistance (r1) is $44.753 and Resistance (r2) is $45.207Micron’s close at $44.30 is +$0.193 above its Pivot Point for Monday (positive)

 

Geo-political RISKS, The USA – China Trade Dispute

 S&P Dow Jones Indices and MSCI GICS Structural Changes in 2018

  In November 2017, , the S&P 500 and MSCI announced changes to their Global Industry Classification Standard (GICS®) and renaming the Telecommunication Services Sector as Communication Services.  The full list  of affected securities was to be provided on July 2, 2018 with updates on August 1st, 2018, and September 3rd, 2018.  

  This week’s Micron outlook.  There are now only FOUR trading days left before Thursday, 9/20/2018, Micron’s Q4’2018, yearend earnings report and after-hours Financial Call.   Consensus estimates on Micron’s Q4’2018 earnings are $3.33 per share.   Micron’s pps meltdown due to China trade tensions, the S&P 500/MSCI sector, industry, sub-industry re-classifications, as well as DRAM and NAND pricing could turn into a melt-up depending on Micron’s forward guidance.     As you can see in the chart below, much of Micron’s pps decline is due analysts’ inability to model Micron’s earnings for FY2019 as the right most frame shows the huge gap in High/Low expectations.  Despite that Micron is expected to earn $11.21 in FY2019, Micron (at Friday’s $44.30) is being awarded a ridiculous forward P/E of 3.952.

 

MU earnings chrt

Quarterly GAAP, non-GAAP, and GAAP (ttm) diluted Earnings per share

  • 09/20/18  Q4 2018 Micron Technology Inc Earnings Release – Estimate: $3.33: GAAP (ttm): $11.29  non-GAAP (ttm): $11.75
  • 06/20/18  Q3 2018 Micron Technology Inc Earnings Release –  GAAP $3.10 non-GAAP: $3.15  GAAP (ttm): $9.95  non-GAAP (ttm): $10.44
  • 03/22/18  Q2 2018 Micron Technology Inc Earnings Release – GAAP $2.67 non-GAAP: $2.82   GAAP (ttm): $8.25
  • 12/19/17  Q1 2018 Micron Technology Inc Earnings Release – GAAP $2.19 non-GAAP: $2.45
  • 09/26/17  Q4 2017 Micron Technology Inc Earnings Release – GAAP $1.99 non-GAAP: $2.02
  • 06/29/17  Q3 2017 Micron Technology Inc Earnings Release – GAAP $1.40 non-GAAP:: $1.62
  • (ttm) = trailing twelve months

 

In the above table, I quote Micron’s Quarterly Press Release GAAP, non-GAAP, and select GAAP and non-GAAP trailing 12 months earnings (ttm).  While many companies reporting earnings tend to beat analyst expectations by a penny, Micron tends to beat by a LOT more.  Sell Side Analysts repeatedly insist on lumping disparate DRAM and NAND chips together.  Micron’s 3D ‘floating gate’ TLC NAND is NOT the same as the competitions’ more expensive to manufacture ‘charge trap’ NAND.  Also, Micron’s strategy of stacking 32-layer blocks appears to offer many satisfactory yield advantages over the competition’s build strategies. Sell Side Analysts continue to argue Micron is a ‘chips as commodities’ manufacturer.  IMHO, Micron is at 45 to 50 percent trade NAND packaging for FY2018. When will analysts finally acknowledge Micron as a ‘packaged products’ manufacturer?  Sell Side Analysts have repeatedly argued Micron has hit ‘peak margins’ only to be embarrassed, quarter after quarter, as Micron’s Gross and Net margins continue to improve thanks to node transitions, satisfactory yield improvements, and packaging.  Sell Side Analysts have also repeatedly argued ‘cycles’ but have (a) yet to be right because technological change, and the pace of that change, make comparing ‘cycles’ of the past to the current cycle a scenario analysis nightmare, and (b) repeatedly failed to explain the breath of demand from multiple sources (A.I., automotive, the Cloud, datacenters, IoT, mobile, PCs, etc. ) other than PCs alone can, and will, offset a slowdown in any one area of demand, or that (c) DRAM and NAND price decreases (offset by costs decreases)  could, and are, as Micron has stated, providing pockets of NEW demand.  Plus, Micron has repeatedly advised us Micron is taking market MU new memoryshare … The biggest failure of the analysts is their repeated failure to credit Micron for all the unique products coming out of Micron’s Research and Development.  Micron learned much the competition has NO knowledge of from the Hybrid Memory Cube, Automata, GDDR5x, GDDR6, and 3D Xpoint.  That’s knowledge, like increasing speed and bandwidth, that Micron can apply to current and future products.  So, I expect Micron to continue to take market share … and to report Q4’2018 and Full FY’2018 earnings near, or even at the TOP of Micron’s guidance. 

 

  Micron has repeatedly stated it gives more than enough information in its earnings reports and SEC filings that any analyst willing to do the homework necessary will arrive at a reasonable facsimile of Micron’s forward earnings.  The problem, as I read the analyst reports, is the LAZY analysts do NOT want to do the required homework … to do the analyses they are PAID to do.   The analysts want to be spoon fed ‘fill in the blank’ answers by Micron’s management and analysts’ writing gloom and doom reports have repeatedly FAILED to arrive at correct approximations.  Why READ gloom and doom analysts’ reports (?) (a) entertainment, and (b) RISK assessments.   The bottom line is Micron’s management, and EVERY company’s management, will ALWAYS have MORE information than even the most diligent analysts.  So, listen to Micron’s management first.  Read Micron’s reports and SEC filings.  Listen to Micron’s conference calls, fireside chats …. It’s your money.  You’ll be glad you did.   See these:

Notes and Quotes from Micron’s SEC filings:

 I. This from Micron’s 10Q (FQ2 20170309):

“Restrictions on Net Assets

As a result of the corporate reorganization proceedings the MMJ Companies initiated in March 2012, and for so long as such proceedings continue, the MMJ Group is subject to certain restrictions on dividends, loans, and advances. In addition, the 2021 MSTW Term Loan contains covenants that limit or restrict the ability of MSTW and/or Inotera to distribute cash dividends. Also, our ability to access the cash and other assets of IMFT through dividends, loans, or advances, including to finance our other operations, is limited and is subject to agreement by Intel. As a result, our total restricted net assets (net assets less intercompany balances and noncontrolling interests) as of March 2, 2017 were $3.38 billion for the MMJ Group, $2.80 billion for MSTW and Inotera, and $894 million for IMFT, which included cash and equivalents of $529 million for the MMJ Group, $297 million for MSTW and Inotera, and $94 million for IMFT. “

II. This from Micron’s most recent 10Q (FQ2 20180301):
(1) “Restrictions on Net Assets

As a result of the corporate reorganization proceedings of MMJ, the 2021 MSTW Term Loan covenants, and the IMFT joint venture agreement, our total restricted net assets (excluding intercompany balances and noncontrolling interests) as of March 1, 2018 were $3.86 billion for the MMJ Group, $2.54 billion for MSTW and MTTW, and $900 million for IMFT.”

The information is provided for comparison to that from the q2’2017 10Q …

(2) “Technology Transfer and License Agreements with Nanya Effective December 6, 2016, under the terms of technology transfer and license agreements, Nanya has options to require us to transfer to Nanya for Nanya’s use certain technology and deliverables related to the next DRAM process node generation after our 20nm process node (the “1X Process Node”) and the next DRAM process node generation after the 1X Process Node. Under the terms of the agreements, Nanya would pay royalties to us for a license to the transferred technologies based on revenues from products utilizing the technologies, subject to specified caps, and we would also receive an equity interest in Nanya upon the achievement of certain milestones.

Note: ” … we would also receive an ‘equity interest’ in Nanya upon the achievement of certain milestones ….

 

  Micron Q4’2018 (my) preliminary assessment of ER report.

  I listened to the great Financial call. I heard Micron management state it achieved two thirds trade NAND packaging in Q4’2018 … on Micron’s path to 80 plus percent trade NAND packaging by 2021. I had only modeled a FY2018 increase to 45 to 50 percent, as noted in my comments above. ‘Packaging’ of multiple chips is amazing for mitigating declining ASPs and sustaining margins. Above, I previously posted my conservative estimates as: “09/20/18 Q4 2018 Micron Technology Inc Earnings Release – Estimate: $3.33: GAAP (ttm): $11.29 non-GAAP (ttm): $11.75”

Micron reported non-GAAP diluted EPS of $11.95. A twenty cent beat on MY non-GAAP #s.

▪ Revenue − $8.44 billion in FQ4-18 − $30.39 billion in FY-18
▪ GAAP gross margin − 61% in FQ4-18 − 59% in FY-18
▪ Non-GAAP gross margin − 61% in FQ4-18 − 59% in FY-18
▪ Non-GAAP operating expenses of $740 million in FQ4-18
▪ Non-GAAP operating income of $4.44 billion in FQ4-18

Micron’s great report was tempered by forward looking information affecting Q1, Q2, and FY2019 on US income tax increases, impact of China tariffs, and Micron is deciding to no longer report gross margins, etc. … IMHO, Micron said it is working on a plan to mitigate the impact of tariffs … and I believe it’ll take a couple of quarters for Micron to achieve mitigation success … unless China and the USA arrive at a fair and equal treatment trade agreement sooner.

Micron’s competitor pull back in cap-ex spending, while Micron is increasing Cap-ex, confirms Micron’s statements that it is taking market share … and that was reinforced when Micron’s CEO advised Micron attained 2/3s ‘packaging’ of its trade NAND in Q4’2018 on the way to 80 percent ( + ) packaging by 2021. Today we heard and read news about Apple’s inclusion of Micron’s chips (and no Samsung chips?) in its newest iPhones.   Micron will sell 3D Xpoint to its 400+ customers, first as packaged products …. anyone not already (NOW) a Micron customer, looking for 3D Xpoint, has that proverbial snowball’s chance … of acquiring any.  There’s more homework to do so I am going back to listen again … and this time I’ll be taking more notes.

 

 

  Micron’s Technical Analysis

   This is a Bull/Bear, PROs, and CONs, BuyHoldSellShort (BHSS) chart analysis with the same capital conserving cautionary and pull back suggestions, as well as the occasional ‘contrarian’ bullish (or bearish) suggestions I have learned to appreciate and use to manage my investments with the Reward/RISK, or RISK/Reward Ratio.
Where appropriate, I add information from my databases, spreadsheets, as well as my notes from conference calls and articles. As I own shares of Micron Tech, I want to know the good, the bad, and the ugly, the
buyholdsellshort because it’s my money. I write this analysis myself, it is MY homework, and I am not paid, or seeking to be paid for sharing this analysis. I hope that sharing my homework, comments, notes and opinions helps you with your investment homework.

 

  If you missed it, please see my last two blog posts for geo-political RISKS comparison numbers, trend, and additional information which will not be boringly repeated below, like Micron’s Expiry close to Expiry close performance.

 

… and now to the MICRON TECH ORD (MU.O) charts

 (Note: I still have additional info to add) :

 

      ——————————————————–

mu 20180914d

Chart 1: Micron Tech, Daily, EOD, O-H-L-C Candle Volume thru Friday’s close

 Chart #1 (Also featured image) annotation Key: Right side, listed bottom to top, the above chart incorporates the Daily chart analysis numbers listed below:

  •   Lx = “If Long, exit all contracts at: $40.68
  • ST rally back = ” … short term price rally back to the $46.60 area.
  • p-profit = “if Short look to take partial profits on any retracement to $52.30”
  • CCS = (if Short) suggested ” …capital conserving stops (CCS) in the region of $53.68 
  •  Sx = “If Short, exit all contracts at: $53.68

  Note the Raff Regression Channel, thru Friday’s (9/14/2018) Close, in the above chart is 116 trading days with a slightly negative slope of -0.020808.  The 9/7/2018 values of the channel are: 63.362, 52.421, and 41.481. 

 

 

 mu 20180914d1

Chart 2: Micron Tech, Daily, EOD, O-H-L-C w/Resistances (r2, r1), Pivot Point (PP), and Supports (s1, s2).  Note: when spreads widen between support and resistance, Micron’s pps tends to decline.  When spreads narrow, the suggestion is Micron’s pps rallies.  The CLAW formation w/Supports (s1,s2) pointing up to the Pivot Point and Resistances (r1,r2) pointing down to the Pivot Point suggest a ‘move’ is at hand, and more homework is required to determine if that move is up, or down.   

 Analysis of DAILY chart activity through Friday’s (9/14/2018)  close at $44.30

    The current trend is down and all orders on the short side may be considered.  The current market price activity  is Strongly Bearish and suggests favorable trade opportunities on the short side.   If already holding short positions, look to take partial profits on any retracement to $52.30. Traders with remaining short positions, after profit taking, should consider placing capital conserving stops (CCS) stops in the region of $53.68.  Be prepared for a potential short-term price advance back to the $46.60  area.

   Suggested placement of capital conserving stops (CCS):

  •   If Long, exit all contracts at:     $40.68
  •   If Short, exit all contracts at:     $53.68

 

Additional Daily chart info:

(1.a) On the EOD daily chart basis, the Moving Average Convergence Divergence (MACD) for MICRON Technology Inc. (MU.O) is bearish since it is trading below its signal line. Micron’s MACD crossed below its signal line 6 trading days ago.  Since the MACD crossed below its moving average, MICRON TECH ORD’s price has decreased -0.78%, and has ranged from a low of $40.68 high to a high of $48.45.  The MACD is in an Oversold range.  Prices may continue to move lower for some time.  Wait for prices to move higher before considering any long positions.  There have been no divergence signals within the last 5 trading days.

MACD Value:  -2.135        Signal Line:  -1.567

 

(1.b) Friday’s (9/7/2018)  Relative Strength Index (RSI) for MU was 35.7338 up from Friday’s (9/7/2018) 29.776.    The RSI move up from below to above 30 generated a Buy signal.  The RSI usually forms tops and bottoms before the underlying security.  The RSI calculations are based on the Close over a 14-trading day period.

  Momentum Indicator Notes:  The Stochastic Oscillator (Stoch) generated a Buy signal on Thursday (9/13/2018).  The Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20).  The Stochastic Oscillator is now at 41.7534 up from 7.9487.  The Commodity Channel Index (CCI) generated a Buy signal on Thursday (9/13/2018).

mu 20180914obv

 (1.c) Micron’s On Balance Volume (OBV) is a positive 15016085.0, down from last week’s,  but while declining, Micron’s OBV is still in an uptrend channel.

 

1.d  Daily Chart  Trend Info

  •  Overall, the bias in prices is:  Downwards.
  •  Short term: Prices are moving
  •  Intermediate term:  Prices are trending.
  • Note: this chart shows extraordinary price action to the downside.

 

  1. e  Daily Chart Price Projections
  • Note: prices are vulnerable to a correction towards 49.82.
  •   The upper projected Target is: $47.84.
  •   The lower projected Target is: $40.42.
  •   The projected closing price is: $44.13. 
  • Note: the above DAILY chart price projection ranges are for reference only and can be easily exceeded by Mr. & Ms. Fickle Markets.

 

mu 20180914sma

(1.f) DAILY chart Moving Averages

  • The 3 period Simple Moving Average (sma3) at 43.22 is in a downtrend.
  • The 9 period Simple Moving Average (sma9) at 45.46 is in a downtrend.
  • The 20 period Simple Moving Average (sma20) at 48.32 is in a downtrend.
  • The 50 period Simple Moving Average (sma50) at 51.39 is in a downtrend.
  • The 100 period Simple Moving Average (sma100) at 53.27 is in a downtrend.
  • The 200 period Simple Moving Average (sma200) at 50.24 is in an uptrend.
  • The 400 period Simple Moving Average (sma400) at 41.25 is in an uptrend.

 

 

 

  Pivot Point, Support, and Resistance Info

If Micron’s pps is above the Pivot Point, the market is Bullish, and the Pivot point is also Support.  If Micron’s pps is below the Pivot Point, the market is Bearish, and the Pivot Point is Resistance.

 

  • See Recap and Monday’s numbers in the above remarks.

2) Monday, Micron Tech (MU) closed at $43.58 down 72 cents or -1.63 percent. Year to date, Micron is up 5.98 percentMonday Recap:  Micron’s Close was -$0.527 below its Pivot Point for Monday (negative). Micron’s Intraday Low was -$0.403 below its Support (s1) (negative) but was +$0.243 above its Support (s2) (positive). Micron was -$0.433 below Resistance (r1) (negative) and was -$0.887 below Resistance (r2) (negative).

Micron’s (PPt-Sup-Res) numbers for Tuesday’s trading: Micron’s Pivot Point is $43.717. Micron’s Support (s1) is $43.113. Micron’s Support (s2) is $42.647. Micron’s Resistance (r1) is $44.183 and Resistance (r2) is $44.787Micron’s close at $43.58 is -$0.137 below its Pivot Point for Tuesday (negative). 

3) Tuesday, Micron Tech (MU) closed at $45.33 up -$1.75 or +4.02 percent. Year to date, Micron is still up 10.24 percent, but down -$19.33 or down -29.895 percent from its 52-week high. Tuesday Recap: Micron’s Close was +$1.613 above its Pivot Point for Tuesday (positive). Micron’s Intraday Low was +$0.767 above its Support (s1) (positive) and was +$1.233 above its Support (s2) (positive). Micron was +$1.687 above Resistance (r1) (positive) and was +$1.083 above Resistance (r2) (positive).
Micron’s (PPt-Sup-Res) numbers for Wednesday’s trading: Micron’s Pivot Point is $45.027.  Micron’s Support (s1) is $44.183. Micron’s Support (s2) is $43.037. Micron’s Resistance (r1) is $46.173 and Resistance (r2) is $47.017. Micron’s close at $45.33 is +$0.303 above its Pivot Point for Wednesday (positive).
Date Open High Low Close* Vol/100
9/17/2018 43.59 44.32 43.25 43.58 282053
9/18/2018 43.93 45.87 43.88 45.33 365074
9/19/2018 45.78 46.06 44.84 45.06 292647
4) Wednesday, Micron Tech (MU) closed at $45.06 down -$0.27 or -0.60 percent. Year to date, Micron is still up 9.58 percent, but down -$19.60 or down -30.312 percent from its 52-week high. Wednesday (9/19/2018) Recap: Micron’s Close was +$0.033 above its Pivot Point for Wednesday (positive). Micron’s Intraday Low was +$0.657 above its Support (s1) (positive) and was +$1.803 above its Support (s2) (positive). Micron was -$0.113 below Resistance (r1) (negative) and was -$0.957 below Resistance (r2) (negative).
Micron’s (PPt-Sup-Res) numbers for Thursday’s pre-QW and pre-Q4’2018 ER trading: Micron’s Pivot Point is $45.32. Micron’s Support (s1) is $44.58. Micron’s Support (s2) is $44.10. Micron’s Resistance (r1) is $45.80 and Resistance (r2) is $46.54. Micron’s close at $45.06 is -$0.26 below its Pivot Point for Thursday (negative).

 

 

==== ===== ===== =====

—  Monday, 9/17/2018 thru Friday 9/21/2018  ——

 

  Hope the above MICRON TECH ORD (MU.O) calculations for Monday, 9/17/2018, day, week, and month (d-w-m) of September 2018,  helps your investing and trading planning today …

 

 

 

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