Memory Stocks Made Us Some Cash, Then Came Wednesday. Now What?
If “memory” serves me correctly, the memory/storage basket of stocks certainly has served me quite well. That trade has made my family portfolio and the portfolios of those who follow my columns some nice coinage this year. But on Wednesday, SanDisk ($SNDK) surrendered 10.62%, Micron Technology ($MU) gave back 10.57%, while Western Digital ($WDC) backed up 6.32% and Seagate Technology ($STX) lost 5.16%. This came after an 893% run for this year so far by SanDisk and a 340% run over 2026 to date run by Micron. Both WDC and STX have had great years-to-date as well.
There was no specific catalyst for this particular trade. The selloff was more than likely very closely related to the fact that Michael Burry (of “The Big Short” fame) had disclosed that he had opened short positions in Nvidia ($NVDA), Applied Materials (AMAT) and the iShares Semiconductor ETF ($SOXX). This provoked a negative algorithmic response that tore into the tech space broadly (The XLF ETF was down 2.57% ($XLF)) and specifically the semis (Philly Semiconductor Index was down 6.27%).
As a sub-component of both the tech sector and the semiconductor industry. The memory/storage trade is where the largest profits are and there was risk at the time associated with this morning’s June jobs report. Hence, these stocks, my stocks, were beaten up. That said, some support seems to have formed for tech since that jobs report this morning, which was unexpectedly weak.
On Micron Technology
Readers will note that MU had developed a “rising wedge” pattern of bearish reversal from mid-May on that took the stock above the upper trendline of my Raff Regression model. The stock tried to break down on Wednesday but was rescued at the 21-day exponential moving average, which is where the swing crowd bought the dip. Some folks in that crowd will feel compelled to take quick profits this morning.
Looking into the indicators, Relative Strength has worked its way lower over recent sessions but remains above the neutral line. The daily moving average convergence divergence has also taken a recent turn for the worse. The histogram of the 9-day EMA has turned negative, which is short-term bearish. In addition, the 12-day EMA has crossed below the 26-day EMA. That would be a more significant medium-term bearish signal if not for the fact that both of those lines are so far into positive territory. That does, in my opinion, dilute the signal. I have not sold any of these shares and do not yet have any intention of doing so.
Target Price: $1,600 (reiteration)
Add: Down to 21-day EMA (worked like a charm for the swing crowd)
Pivot: Recent High (currently $1,255)
Panic: Loss of 50-day SMA (currently $842)
On SanDisk
Here, readers will see that SNDK had also developed a rising wedge pattern of bearish reversal, but from March on that also took the stock above the existing trend. Though volatile, the stock did not really try to break down on Wednesday but remained within its recent range. SNDK, like MU, was rescued at the 21-day exponential moving average, likely also by the swing crowd that bought the dip. The difference, though, is that there was no quick and profitable turnaround in this name on Thursday morning. It will be interesting to see what that group does with this.
Looking into the indicators, Relative Strength has worked its way lower over recent sessions, but remains above the neutral line. The daily moving average convergence divergence has also taken a recent turn for the worse for this name. The histogram of the 9-day EMA has turned negative (short-term bearish). In addition, here too, the 12-day EMA has crossed below the 26-day EMA. Again, the positioning of those two lines, in my book, dilutes the medium-term signal. I have not sold any of these shares, either. The only name of the four that I have been using as a vehicle of trade would be WDC.
Target Price: $2,600 (reiteration)
Pivot: $2,354 (June 16th high)
Add: On any retest of 21-day EMA
Panic: Loss of 21-day EMA (currently $1,954)
At the time of publication, Guilfoyle was long MU, SNDK, WDC, STX, NVDA equity.
