Micron Stock Resumes Selling After Bear Note

MU stock spent most of last week above its 40-day moving average

Jan 14, 2019 at 9:42 AM
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The shares of Micron Technology, Inc. (NASDAQ:MU) are down 4.6% at $34.35, after Morgan Stanley cut its full-year earnings estimate for the chipmaker, citing weak NAND and DRAM prices. Analyst Joseph Moore now sees Micron reporting current-quarter earnings of $1.52 per share, and a 2019 profit of $6.83 per share -- the second lowest on Wall Street.

Today's early morning downside puts MU stock back below its 40-day moving average, following three consecutive closes north of there. This trendline, alongside its 50-day cohort, has helped usher Micron shares to a six-month decline of 38%. What's more, the chip stock has underperformed the S&P 500 Index (SPX) by nearly 10 percentage points in the last three months.

Skepticism has been ramping up on the broad-market laggard, too, with short interest up 12.5% in the two most recent reporting periods. However, the 54.33 million shares currently controlled by shorts accounts for a low 5% of MU's available float, meaning the bearish bandwagon is far from full.

Elsewhere, the security sports a top-heavy front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 1.11, which means near-the-money puts outweigh calls among standard January options. The January 2019 35-strike put is home to notable open interest of 38,719 contracts, and data from the major options exchanges confirms buy-to-open activity here.

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