4th Quarter Stock with 1st/2nd Quarter 2022 Potential
As an enduser of Micron memory products I take a great interest in the company. Micron (Mu) has weathered the second year of the pandemic, fears of inflation, and Fed policy changes. In the second and third quarters of 2021 Micron retracted in price from the year’s high of $96.98 to a low of $65.65, while the technology sector XLK only retracted during the 3rd quarter of the year. This divergence in Micron’s price from that of the sector can be seen below. The NASDAQ has a year price target of $100.50. All these first observations were capture the last two weeks of December 2021.
The week opened with Micron surging 11% with Monday Dec. 21st earnings report. Micron saw some price consolidation on Wednesday 22 December daily chart as indicated by the inside bar below. The upward price break of $90.48 for the inside bar (labelled 1) is seen as a continued bullish pattern for Thursday December 23rds continuation bar (labelled 2). Bullish market sentiment has been expressed by Seeking Alpha and Investor’s Business Daily. The next price target would be the yearly high of $96.96 and then the forecast of $100.50.
As of the last week in December, Micron (Mu) will be observed for the next price break of the current continuation bar high of $95. Overall market conditions will greatly impact price movement above all time highs. The semi-conductor sector having been impacted by the pandemic and resulting supply chain issues is projected by some to continue to be a favored industry to be invested in as demand continues into 2022 as reported by MarketWatch.
Update Febuary 20, 2022
The 60 day follow-up on Mu shows a stock continuing to be impacted by the broader market and economic/world catalytic events. Our top chart below is the XLK and the bottom Mu. With each, sideways movement was observed into the start of 2022, and likewise each declined with the unfolding of inflationary concerns and the corresponding Federal Reserve meetings and minute releases.
In spite of the inflationary concerns, and unlike the borader XLK or SPY, Micron has been able to recover to it’s pre-Christmas price levels. The pent-up worldwide demand for chips remain even with the pullback in manufacturing that requires these memory products. At the close of 2021 Forbes reflected on a Coughlin Associates and Objective Analysis depicting projections for various memories, suggesting increasing demand through 2031. Likewise during the month of January 2022 other outlets suggest an optimistic outlook (Seeking Alpha, CNN Money, Fool.com, etc).
The remainder of the first quarter may continue to be muddied with the current geopolitical events unfolding in eastern Europe between the Ukraine and Russia. Inflationary concerns and the Federal Reserves response will also continue to be a major factor in short term to intermediate returns. All interested eyes will be focused on the anticipated late March 2022 earnings report. TipRanks.com has a consensus EPS forecast of $1.97 which is double last year’s EPS OF $0.98 – with an analyst consensus of “strong buy”. A break of the previous week’s (week ending 18 February 2022) high of $96.50 will place Mu back in the favorable sights of traders for a push towards it’s $98.45 high. Otherwise the less favorable break below $88.80 below the 20 day EMA will be a bearish break lower with targets of $83.63 and approximately $80. The month of March will be telling. An additional follow-up forth coming.
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