Danielle Shay on MU, SNDK & STX Technical Analysis, Options Strategies

Decliner down more than 5%. Going deeper on tech. Joining me right now Danielle Shay VP of Options Simpler Trading. I'm so glad to see you. Thank you so much for being with us. So what's going on with the memory stocks there hot then they're not your thoughts on a name. Let's say Apple and Micron for example which had been running up. And now when we look this week it's down but had been at 1255. Right now it's at 967. Some of your thoughts on some of these memory names. Well, you know, these stocks have pulled back pretty substantially throughout the summer, and I won't be surprised at all if they see continued volatility throughout September and October due to seasonality. However, I continue to love this space and I'm going to continue to invest on this pullback specifically with micron. This stock has a history of rallying going into earnings. And we're just entering that pre earnings time frame next week. So if you take a look at this stock and look at the past pre earnings rallies on average it moves about 13%. So I am long this stock right now. I am looking for a potential rally going into September. And I love how it broke up above the 50 SMA on the daily chart recently which is a buy signal. Yeah. That's something that everybody's watching. I've heard so many references to the 50 day, not only on micron, but also just across the board on the Nasdaq key levels to watch here. You mentioned micron here and you are long this one. Are there others that you also like here. Because at this point you talked about even being so bullish. You looked at a bullish trade that you said looking at 1100 on this name. Could you tell me about that before I move on to Seagate and SanDisk? Sure. So I love trading 50 simple breakouts. It's one of my favorite moves. And you know, because it is such a common level, it does become a little bit of a self-fulfilling prophecy. You know, when you see a sector underneath that zone and then suddenly you get that nice high volume breakout. It's just one of my favorite entry points. And so looking at micron here, I have butterflies on in the options market 1000 1100 1200. And I'm targeting that for the September expiration series. And so with micron you know that just gives you an ability to put an options trade on. That is pretty wide in nature. However it brings down the cost of the long call pretty substantially. And it just it really just gives you a zone of profitability. So that's typically how I trade this stock. You know, you don't want to place butterflies in the actual earnings series itself. So I typically do those the week before earnings to capture that rally. Going into that earnings report. And so I know that you've been positioned. You said you're reducing some of the longs. You're ready to hedge with the triple Q's or the SMH if necessary. And you're watching different indicators. First of all, you have September seasonality, which often could be a tough month. Volatility has been on the rise. You talked about put call ratios increasing, but you're still trying to do this until you get a couple of closes below the 50 day moving average on the Nasdaq. Right. Is that sort of the premise. Yes that's correct. So I mean even though I will hedge overall, I will still have a few relative strength longs on. And micron is a great example of a relative strength long that can tend to move against the market. As far as SM and the Q, Q, Q are concerned, both are still underneath the 50 simple on the daily chart. And so when you get to closes below that zone, it is typically difficult to see a rise up above that level unless you have some incoming volume, some sort of catalyst. Right now we're just in a little bit of a lull. We don't have very many earnings reports. Of course we have Nvidia next week and then we have that September seasonality. So I will hedge on a short term basis. When I see SM breaking down below this zone. And I have multiple different tickers within SM breaking down. But ultimately I'm still buying long term stocks. And I'm still looking for those relative strength tickers to trade to the upside as well. Can these names get back to their all time highs. Is it sort of like oh yeah, for sure. It's just sort of technicalities here right now. I mean we look at names like Seagate and SanDisk. You just talked a lot about micron. Can these names get to highs. And then tell me a little bit about some of these other names that we just mentioned. I absolutely believe that they will. I don't think that it's common to look for that in September. However, once we get into October or November, then you get the end of year rally. These are very common rally timeframes in the stock market. And so what I like to do is position for that now. And so what I like to do is I like to look for consolidation, specifically a squeeze on the daily chart. On the weekly chart I'm looking for these stocks that have pulled back from highs. They're consolidating. They're building up that pressure and they're getting ready to go. And so for that reason I like Seagate the most right here because Seagate does have that consolidation on the daily chart. And it's just below that 50 simple level. And so all it needs is it just needs some news report some kind of incoming volume. And then I think when it breaks out, it will be go time back up into that previous all time high. Oh, and by the way, that does typically happen before the earnings report. Okay. Well look it's down 12% this week. Seagate. I mean we've seen you know that's a big move. I know sometimes we've been getting earnings and we're seeing ten, 20, 30% moves on a given day. We've become more accustomed to some really big moves. But it's worth noting that the stock's down 12% this week. And for someone who loves it, maybe they say this is where I pick it up. I mean, year to date it's up to 10%. But when it's down 12%, don't you love it more than you did a week ago? Well, you know, when you look at the volatility we've seen in these names, you really needed to get accustomed to this kind of volatility. If you're going to play with these kind of names. And you know I think it's very typical for these stocks in particular to see those rallies before earnings and pull back after earnings. Because you just have a lack of overall catalyst. You have a lack of overall attention to the names. And so I'm not concerned about the move at this time. And I'm looking forward to the fact that it has pulled back and it has given me a better buy entry. And if and when that volume comes back in, there's going to be an explosion to the upside. All right. Danielle Shay, thank you so much. VP of options