Can MU Shift The Market’s Momentum Post-Earnings?
MU earnings are spurring a positive reaction in after hours trading at the time of this newsletter, lifting QQQ to the 624 resistance area discussed yesterday while SMH tests 645. We’re hesitant to take big risks based on a stock’s GEX picture going into earnings given incalculable uncertainties, but we could see the picture shift for MU tomorrow. As of now, the big GEX at 1200 may see dealer selling pressure, and bulls will want to see the HMA at 1107 maintained for better odds of more upside. QQQ and SPX are within the ranges we’ve been watching, but no decision has yet been made as to the next trending directional move. Will we break out of the range tomorrow?
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MU: Double Top At 1200, Or Onward Toward 1300?
I’m a free cash flow guy in terms of fundamentals, because it’s harder to fake cashflow than it is EPS. Headline numbers on MU look impressive, but I haven’t looked under the hood. Such questions aren’t important for my goal of trading what’s in front of me, but investors have been pricing in massive expected growth over a long period of time into the future, so the true nature of MU’s future prospects become important in ascertaining whether or not current prices or higher prices are justified. While only longer-term investors are likely to care about such things, the market’s conclusion may come full-circle back to positioning and whether or not MU can hold current gains. We don’t see a lot of GEX above 1200 on a relative basis at the moment, and MU is extended above the weekly upper Keltner channel (not shown on the daily chart below), a condition that is often met with consolidation. We’ll want to look at MU earnings after the cash session begins before drawing further conclusions about where MU is headed next.
Key Levels (as of pre-earnings)- bullish over 1108 targeting 1200. Bearish below 1000 targeting 900.
QQQ Covers The Entire Outlined Range In One Day
In yesterday’s newsletter, we proposed a potential range of upside and downside targets from 700 up to the 724-727 area. In an unusual display akin to my kids after sneaking too much candy for themselves, QQQ bounced off the walls, reaching 704 at the low today and climbing beyond 724 after hours before fading back under it again. This range is still valid in my view, with 724-727 still appearing to be important resistance on the daily chart. The next high-odds move may happen beyond the 700 or 724-727 boundaries.
Key Levels- Bullish above 727 targeting 740, then 750. Bearish below 697-700 targeting 690, then 660.
SPX Is Also In The Process Of Digesting The Next Anticipated Move
SPX is also still within the boundaries we laid out yesterday, and it’s unclear whether or not SPX will participate in MU’s celebration (if there is a “celebration”) the same way QQQ will. 7435-7450 is important resistance to the upside, with a loss of 7320 potentially leading to 7244. Today’s low of 7336.82 was pretty close to 7320, but I usually like to see the gap at 5-7 points or less before I consider it “hit.” The 3D model still shows 7320 as a big one expiring this week, so we are watchful regarding whether or not the next bounce attempt holds.
Key Levels- Bullish above 7400 targeting 7435-7450, then 7500. Bearish below 7400 targeting 7320, then 7244.
The VIX Holds Potential To Spike Toward 25
The VIX is holding above key weekly and daily moving averages, which have only started curling up as the GEX picture is positive. Regaining 20 becomes key to potentially trigger momentum toward 22 and then 25, though any weakness in the VIX in the morning needs to hold 17.40, or else we might see 14-15 again as the market heads for new highs.
Key Levels: Bullish (for volatility) above 20 targeting 22, 25, then 30. Bearish below 17.4 targeting 16 initially.
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