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Micron: That Good Old Buy-On-Weakness Signal


  • All the professional portfolio managers buy on weakness.
  • They have to, because they buy in size, 100,000 shares at a clip.
  • The rest of us wait for the breakout and chase price higher.
  • Watch Micron go as this is now happening.

Micron (NASDAQ:MU) was continuously on our Buy-On-Weakness Report with a fundamental Implied Return buy signal that was hard to believe. The selloff below $40 just did not make any sense. Here is our chart showing our big, fat, fundamental Implied Return buy signal the bottom of the chart.

This buy signal survived all the selling that took it below $40. More important, our overall passing grade, which is our most important fundamental/technical buy signal, also survived the selloff. When sellers fail to reverse our fundamental and technical buy signals, our computer system issues a Timing, Buy-On-Weakness Signal. You can see that happened at the bottom of this chart.

Our Fundamental/Technical Buy Signals

Here is the chart on Jan. 9th showing these signals:

Notice, on the above chart, the very high grade of 88 out of 100. The Implied Return calculation is enormous, at 41.8%, yet the Demand is dropping and sellers are taking it down again despite our very attractive fundamental and technical buy signals. Crazy! As soon as the sellers finish and Supply peaks below the line, it is a perfect time, once again, to buy on weakness, like the professional portfolio managers.

And here is the latest chart showing these same fundamental and technical Buy signals:

Now Supply has improved to the point where Demand is driving price higher. Our Buy-on-Weakness signal clicks off and our Confirmed Buy signals click on. But don’t accept our computer answer, let’s drill down and find out why there was selling and why there is now buying.

Let’s see what recent analysts are doing and then drill down into the fundamentals they are looking at to make their targets. The consensus target is near $60 while recent analysts are upping their targets to $75-$85 according to finviz.com. If we use these targets, there is a possible appreciation

Become my follower and receive our daily Buy-On-Weakness daily report by signing up for the 2-week free trial.

This article was written by

Tom Lloyd profile picture

Tom’s book "Successful Stock Signals for Traders and Portfolio Managers" is available on StockCharts.com and Amazon. The StocksInDemand.com system is designed to make money using a combined fundamental and technical grade for each stock. Tom received his MBA in Accounting from St. John's University, where he taught courses on the stock market. He marketed fundamental research, technical research and quantitative research to professional portfolio managers during his Wall St. career. He uses all of these methods to pick stocks for investing and trading.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in MU over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (165)

oh oh my god the sky is falling, just kidding, maybe a little consolidation this morning
Oh man, o need to sell my Jan ‘20 $1950c’s, then
you said it all Triple L right on brother! Wash
kscopes profile picture
This video says lots about why it's different this time:

what the heck?....mu is up 40 cents at 9:36....huh?...what the heck
New to this thread, and DRAM investing in general, but have traded this name on and off for many years. Never considered this stock as suitable for longer term investing....until now. With DRAM densities continuing to climb, the day when you will be able to run your entire operating system in RAM, along with all your applications, is quickly approaching. Yes, I know, you can already do that with a server motherboard, but, before long, even a generic PC motherboard will give you that capability. They're getting close now.

When that day arrives, DRAM demand will go through the roof. Could realistically happen at 7nm, I suspect. I know for my own machines I already run 32GB of RAM and periodically allocate 20GB as a RAM Drive for Video Editing.

That sort of shift should usher in a huge wave of demand for a pc refresh cycle, along with the accompanying astronomical demand for DRAM.

We could be at the very beginning of a DRAM super cycle that could last for several years. Apologies if this has already been mentioned. As I said, new to the thread.

Currently lookiing for an entry point on the long side.
3x- thanks for your post, what entry point have you in mind?
it just jumped $54 and keeps trucking forward
panzer profile picture
I just bought too this a.m. A very stingy PE accorded to MU. I don't get it. gonna pay to find out the answer. I am hoping the nvdia AI interest spreads to MU, and don't see why it shouldn't. This means a dramatically higher PE
Cramer is now out in full force talking about MU trying to be the expert and claiming credit. Move on!!!
linklinklink profile picture
Here's the video of Cramer on CNBC today recommending everyone go out and buy MU hahaha! This guy is a complete joke telling everyone not to buy at $39 and telling everyone to buy at $52

He says he likes MU now because PC demand is picking up but then says mobile phone demand is down, which would also affect MU.
I don't watch cnbc because of cramer, he's a total idiot

and I agree with you he didn't say buy at $38 but now screams at $52

Hopefully we can all enjoy this and brag a little...I think we deserve it....so I'll just give myself a shout out on all those April $45 calls I was buying and still own all of them. Think some longstanding commenters were in on that same trade.
Wonder what the shorts are thinking.
n4ca profile picture
05 Mar. 2018
Why does the author not own MU?
INCREDIBLE! Thank You $47.50 3/9 CALLS!! Woo HOOOOOO!!
Bkirk profile picture
What a day.
we even have cramer on the bandwagon now....jimmy loves mu !
To tigawoods1: Yeah, I just saw Cramer on the Halftime Show on CNBC taking credit for one of his The Street newsletter writers. It was one of his writers positively reporting on MU but it was obvious Cramer was trying to take the credit for NOW recommending MU. Of Course at the end of the segment he had to make a “shoutout” for his beloved NVDA (I am not sure if he was calling out the stock or his dog). Someone recently used a Kevin O’Leary (Shark Tank) comment on a post and said “Cramer is dead to Me”. AMEN!

Wishing You Well!
now we just need jimmy to rename his dog "micron"
Still curious as what the catalyst is for today. Can't be the BAML report can it?
Its pretty much like clockwork every quarter....the money comes piling into this stock a few weeks before earnings.
craoarc profile picture
Look at that volumes!!!!
It is truly Amazing to see it Over $50 for the 1st time in 17 years and on Heavy volume Above $52 now - After being Down in Pre-Market and Opening Down!?! It is in such a break-out! But, into Short term puts now, then into longs again into EPS!!
a breakout with volume almost 70% over avg volume is telling. Money moving in for. Congrats for the longs staying with their conviction as $MU was played with to try and drive you out of the stock. Still my #1 pick as I hold 8,800 shrs.
Congrats Kevn for a well deserved conviction hold.
and dont be surprised if some big company offers to buy mu for about 120 per share....which we should vote no ..because thats to low
though worth it, a $130B+ acquisition would always be surprising
Oh, I would sell at $120, tiga. I don't see 140% premium though or if we were at $60, a 100% premium. But I like the way you think. :)
MU kicking butt today, congrats to all
See how much of it will stick.
kscopes profile picture
Easy there tigawood....
i forgot to put these in..( ! ! ! ! ! ! ! )
To be cyclical or not be cyclical that is the question.
Hooray!!! MU blows the lid off from the previous high. Never thought it crosses $50 this early. Cheers all my fellows on SA!!!
congrats- we just climbed over the $50 wall on our way to 60
Lejun James Shao profile picture
China is now pushing very hard to have is own memory chip manufacturing capability.

They are going to form a joint venture with South Korea for this matter.

Also, if Trump and China have a trade war, China may put a tariff on chips imported into China.
trump might put a tarrif on chips that are imported to china?...huh?..what?...
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