Micron & Sandisk Dump After Breaking News (Here's The Gameplan)

Four days ago, I made a video for you all titled "Micron and SanDisk are about to make a very important decision. Watch close." And in that video, we talked about the fact that both Micron and SanDisk, which are two of our favorite memory companies here on the channel, were approaching key levels of support that I thought were going to have a massive impact on how its price performed moving forward. >> [snorts] >> I said, if we hold these levels of support, there's a lot in which we continue to see this upward momentum from Micron and SanDisk. However, if we see SanDisk coming down and falling through this ascending level of support and Micron coming down and falling through its golden zone and falling through its ascending level of support, guys, things could get somewhat ugly and you could be looking at 5, 10, 15% corrections happening as early as next week, which is this week, for these two companies. So, I told you very clearly in that video. I said, "You're going to want to go in. You're going to want to draw out these levels and watch them super closely as we go into the end of last week and the beginning of this week cuz I'm telling you what happens here is going to have a big, big impact on how Micron and SanDisk move going forward." And I told you, once we finally got a bit of clarity on what decision it was going to make, up or down, I would jump on and make a video for you giving you an update, letting you know what I was doing next. Well, what we can see, if we fast-forward just four days later, is that both SanDisk and Micron have officially broken down below the support levels that we were talking about in these videos as SanDisk is now down 6% today and Micron is now down about nearly 4% today as a result of some news that broke earlier this morning. And so, since we have now seen that decision being made that we were talking about in this video, naturally, I wanted to give you a bit of an update on exactly what is going on, why we're seeing Micron and SanDisk falling right now, especially when it comes to a news perspective, what this means from a technical perspective, right? Like, where can we see their prices going from here, and exactly what sort of trade options are available to us right now with Micron and with SanDisk now that their prices have come down a little bit today, okay? So, we have a good bit to get into today and as per usual, I don't want to keep you too long on a Monday, folks. So, let's go ahead and let's jump straight on in. So, first and foremost, why are we even seeing a red day in the first place when it comes to Micron and when it comes to SanDisk? Well, some analysts may go and say, "Well, obviously it's because, you know, we had this ending level support and these historically will break down and so we're naturally just rolling over because of technical price structures, supply and demand sort of things." And I could see that reasoning, but in my opinion, I think the reason as to why we're actually seeing this pullback is much more fundamental and it has to do with the news that we saw earlier regarding the Chinese company CXMT. So, I dropped this tweet earlier. It says, "Micron fell below $1,000 today following reports that China's CXMT is developing new server memory technology that could pack more memory in the smaller chips. The concern is that increased competition could put downward pressure on DRAM pricing over time. However, there's an important distinction here. CXMT has announced progress and plan to launch products by year-end, but that does not mean that they've proven that they can manufacture these chips at scale, especially not the scale that Micron's doing this at, okay? So, yes, this is a potentially long-term competitor, you know, competitive threat to Micron, but not necessarily an immediate threat to its HBM business, which continues to benefit from AI demand. So, this news right here, what we got from CXMT, that is realistically the reason as to why you saw these memories come these memory companies pulling over. And this is why I tell people all the time, although I am someone who would you would probably generally consider to be a technical analyst because I do spend a lot of my time on the charts, I'm not oblivious to the fact that these charts are obviously moved around by what's happening fundamentally and what's happening in the news. And what we saw in the news today is, in my opinion, the reason as to why we're seeing these memory companies pulling back and having a bit of a red day. Now, when it comes to the actual news itself, I mean, what I said here is basically what I feel about it. Yes, could this be some sort of long-term competitive threat? For sure. But you have to understand that promises and plans are not the same thing at executing on a massive macro global scale. How many times have we seen so many companies, especially more, you know, Asia-based companies, say that they were going to take out one of these frontier companies, but they really weren't capable of doing it on a scale that, you know, these companies are executing on. And so, the idea that I'm going to go in and just sell off some of my, you know, some of my memory chips or or my memory stocks, whatever, as a result of news that it just Yeah, you know, >> [snorts] >> yeah. That's kind of how I feel about it. I'm like, "Okay, we'll see." You know, we'll see if this is the case and if this does play out, sure, things will shift around. Things will Things will change, for sure, but that's just not where we are right now. That's just not where we are right now, and it's not something that I'm super, super concerned about as someone who does have exposure in different ways to some of these memory companies, okay? So, that That's the news. That's the reasoning as to why we're pulling back. Now, from a technical perspective, this is something that we were eyeing, okay? This is something that we were watching. Now, I'm not going to go out and say that I was predicting that Micron and SanDisk were going to make this move, right? I actually told you guys in this video from a couple days back that I thought it was a 50/50. I thought we were at a true coin flip, which never really happens. It's very rare that you're actually at a 50/50. So, I wasn't really predicting anything. I was just going to let it come to me, and we would see how it's going. But, now that we are seeing Micron and SanDisk breaking towards the downside, the plan the the game plan moving forward becomes actually very clear, very easy, very simple, okay? Um kind of understanding what comes next right here, it's usually pretty easy with these sorts of companies. So, let me tell you what I think is going to happen next year, okay? So, what I think is going to happen next year is that Micron SanDisk Micron and SanDisk, these two memory companies, of course, are now naturally being rejected off their Fibonacci golden zones and are going to come down to try to identify pockets of buyer side support, buyer side liquidity, and attempt to use that buyer side liquidity to try to return towards the top side. That's what I think is going to happen. I think you're going to see them come down maybe a little bit further, right? I definitely could see Micron, for example, going a bit deeper into the 900s, right? And then try to identify levels of buyer side support and use those levels of buyer side support to try to make runs back towards the top side. And the reason why I believe this is actually a mixture of technical and fundamental analysis. I want to start with the fundamental analysis real quick and I'll spin it back to the technical, okay? First and foremost, the reason why I believe that this is only going to be a maybe, you know, a a short-lived pullback. Um not to say that it can't get worse, but I don't think it's going to take, you know, weeks and weeks and weeks is because this news is I don't want to call it a nothing burger. It is not a nothing burger, but it's not something that could substantiate, you know, tens of, you know, maybe even hundreds of billions of dollars at some point in pullback. I I I don't really think that's the case whatsoever. We've seen this story play out dozens of times in the semiconductor space at this point. I don't think this news is big enough for people to be scared about it for a long time, essentially. And so because of that, I think you're going to get an initial sell-off. Then I think people are going to go, "Maybe that wasn't as bad or as big of a deal as we initially thought." And then you're going to see some of the buying pressure enter back in. Remember, Micron just produced really solid earnings. It's It was rallying, you know, kind of going into those earnings and since then it's held up well after those earnings. I don't particularly think this is something that's just going to take Micron from a fundamental perspective all the way down here. I could be wrong. I just don't see that happening, okay? So that's the fundamental reason is I think this is just short-lived and because that is how I believe Micron is going to respond, I think that SanDisk, as a in many ways a beneficiary of what Micron does, will respond the same way. You're going to naturally see SanDisk sell off a little bit, just like Micron will, and I think when Micron tries to recover, SanDisk will try to recover as well. Just remember, SanDisk has bigger swings up and bigger swings down cuz it's more of a high beta smaller company, okay? But anyway, so that's the fundamental reason as to why I don't believe that this is going to be some sort of like long-lived massive nasty capitulative pullback, okay? From a technical perspective, um the reason as to why I believe that we are going to see the buyers step in and try to support the price of Micron is just because that's what normally happens in this scenario, okay? So, through my years, I I've been looking at charts for every day for 6 years now. Um total 8 years, but those first 2 years I was kind of just dabbling. Um but through the course of the last, you know, 8 6 years, however you want to frame it, one thing that I've come to realize is that in these sort of environments in which you have a high like this, you have a low, you return back up to your golden zone, right? Your golden Fibonacci zone of resistance, you get rejected off of it, and you lose some sort of trend line, normally what just happens is that there are buyer pockets in here, usually along that trend line. So, you know, it may be like right here, maybe right here. There are also going to be bottom side golden zone levels. One is going to be like right here right now between 975 and 941. There's going to be another one sitting right here between 866 and 809 dollars. And because there's so much liquidity, whether it's structural liquidity like support or golden zone liquidity as you can see right there, usually what ends up happening is that although the sellers may take a little bit of momentum at first, usually those buyers will step in and just try to force that price back up. And one of the first most obvious signs that that is the case is how overextended the price starts to get when you initially pull back. So, if we actually turn on the toolkit real quick and we look at what's going on with the HCI on the 4-hour time frame right now, um let me get rid of this real quick. There we go. What you can see is that the 4-hour HCI is already at a minus 3.86, and the daily HCI, although it's not factoring in today's pullback yet, is already at a minus 1.86. What that means is that the price of Micron is already resetting as this pullback is kicking off, and it really just started in terms of price action, right? Like we just fell out of the golden zone. And although we just fell out of the golden zone, you're still seeing this HCI down here and resetting. And if you don't know what the HCI is, the way it works is very simple. The further down the price goes, the meter will go down. As the meter goes between minus 3.5 and minus 5, that's considered oversold. Usually the price is getting too low, and it'll try to reverse sometime soon. The same thing works at the top side. As the price goes up, the meter goes up. This is considered the too high territory. You'll usually see the price start to pull back, right? So, when your meter's down here, it means your price is getting {quote} unquote too low. In addition to the HCI showing too low, you can also see we're getting drives of bullish divergence as we have started this pullback. And so, again, what this means, this is a great clue that as the price is coming down, it's already correcting, it's already resetting, and the odds of the sellers being able to pick up steam and really just rocket ship this thing downwards or submarine, I guess. This thing downwards, not super likely in my opinion, okay? I think it's much more likely that even if the price does continue a bit lower, I could see that for sure, right? And I'm going to look at Sandisk here in a second. But, you know, although I could see Micron, for example, coming back down into 940, 950, maybe even $900, something like that, right? I think it's more than reasonable to assume that the buyers are going to step in and slow this thing down, and maybe even try to push it back up over a thousand to retest that golden zone again, okay? So, I'm definitely not feeling super concerned from a fundamental nor technical perspective when it comes to Micron. And the same exact thing goes for Sandisk. What you can see is that Sandisk price got rejected off that golden zone, but as it's getting this pullback through that ascending level support, it's now at a minus 4.1 on the 4-hour HCI. It's sitting at a minus 3.18 on the daily HCI. You're getting bullish divergence on the 4-hour time frames already. It just goes to show that as it's hitting all these support levels, it is correcting, it is resetting, and it is likely that it will try to find some support and use that support to maybe try to make another run towards the top side. Is it going to take it all the way to a new all-time high? No, probably not anytime soon. But, can it easily recover through some of this pullback that it's had recently? Definitely. So, I'm not feeling super concerned about this pullback whatsoever right now. I actually do think that it could be a decent time to start building into some sort of position, um if that is your prerogative, right? Like, if you're looking for an opportunity to dollar cost average or buy a bit of Micron or buy a bit of Sandisk. Honestly, not not looking like a horrible time. I've actually been considering that if we see Sandisk and Micron continue a bit lower. Like, let's say, for example, I'm looking at SanDisk coming down towards 1,400. I'm looking at Micron pulling back towards a 920 to 940, somewhere back in this previous liquidity pocket, that I may actually go in and add a little bit of a um a long trade on them. You guys know Micron and SanDisk are two of the um two of the companies that we do a decent amount of leverage trading on, which is essentially I'm using long trades to bet the price is going to go up or short trades to bet that the bet to bet that the price is going to go down. And I might take on a bit of a Micron or SanDisk long trade pretty soon here. If we continue to get this overextension. Like, if they continue a bit lower, they continue to really push into these key zones of support, yeah, I'll be willing to go in and maybe try to fade that pullback with some sort of long trade. Let's say, you know, I'd probably call it 3x to 5x leverage at most. That's usually the leverage size that I like to interact with Micron and SanDisk on, okay? So, I'll keep you updated as that as that does play out. Of course, that's not something I'm doing right now. So, maybe just be on the lookout for tomorrow's video to see if I'm actually going to execute on it. I'll also post it in the Discord if I do take advantage of one of these trades. So, check out the Discord, which is linked down below. But nonetheless, the moral of the story here is just to say that, look, now that we are getting this pullback like we were watching out for in that last video as a result of this news that we got today. From a technical and fundamental perspective, I'm not feeling genuinely concerned about this whatsoever, and I do think it's going to find some relief, and I think it may go ahead and try to even give you a relief rally sometime pretty soon. The only thing that would invalidate me here, I guess, what would make me wrong is if this news continues to develop. Like, let's say there's even more news that can substantiate that they can do this at scale or something of that nature that makes us a little bit less rumor and a little bit more fact. Um that could maybe cause this to capitulate and scale a little bit more, but even then, I'm really not expecting that to happen, okay? So, I know this pullback today maybe feels a little bit rough, but I honestly I'm not I'm not I'm not super scared of it. And I'll keep you guys updated as it plays out, okay? So, that's what I got for you guys whenever it comes to that. Hey, I will let you guys know, hey, the platform that I do all of this leverage trading on, or I'm going on and, you know, opening up long trade or a short trade on Micron or Sandisk or SpaceX or whatever it may be. It's called Liquid. I exclusively trade my stocks on Liquid whenever I'm talking about actually like entering in swing trades and day trades because they offer some of the absolute best perks and best fees, in my opinion. Um and the coolest part about it is that if you do want to trade some yourself, if you want to start getting involved in the world of trading in the stock market, guys, there's a link down below to Liquid. If you deposit $100, they're going to give you a $20 bonus back. So, it's an immediate 20% return on that $100 deposit, and you're going to get 10% off your fees in perpetuity, meaning you're always going to get 10% discount on all of your trades moving forward in terms of fees, which helps your P&L mechanically, okay? So, make sure to go check that out. The link to that is down below. This is the platform I exclusively do all of my stock trading on, and I think you guys will like it, okay? So, I'll keep you guys updated as it um yeah, as it all does play out, but all in all, not feeling super scared about it. So, let me know your thoughts down below if you have any other ideas, especially when it comes to that um the China news, and that what kind of causes this pull back. If you have any maybe further thoughts or ideas you want to share, feel free to share them down in the comments down below, and I can't wait to see you all in the next one. Peace out, everybody.