Micron's Stock Future Is In Limbo This Week
The chart is actively deliberating between major new lows or only a small correction
This week, I’m beginning a new phase of Tech Cache’s free Substack and plan to release three articles a week. The first article of the week will come on Sunday with a deep dive on an asset I’m covering due to news, political relevance, a significant catalyst, or it being on the cusp of a substantial move (ergo, moving my typical Friday posts of late to Sunday). Monday and Thursday will offer a lighter fare with a single ticker in each that I’m watching in the near-term, as its chart may provide immediate actionable course for us investors that week. Since we’re already mid-week, I start with the first Thursday edition.
Last week was pivotal for Micron’s chart as it took my primary scenario of lows to the $70s and $60s to the edge of invalidation. While the odds have decreased for those levels of lows, it’s still technically valid.
As you can see in the chart below, the stock went through my green wave (2) target zone on the right-hand side. Usually, a second wave doesn’t go past the 61.8% and rarely goes beyond the 78.6%. In fact, it went so far past it that it was within a dollar and a quarter of negating this (1)-(2) wave setup altogether.
So, what does this mean now?
It means the five waves down I followed in real-time (wave (1)) could be an A wave and not wave (1). Five-wave A waves are not common, but this is Micron we’re talking about after all. Therefore, we could be looking at only a larger three-wave move down, with the rally this past week being the B wave, shown below in yellow.
This would mean one more lower low, but only targeting the $102 area (the 100% extension of waves (A) and (B)). Ultimately, this yellow alt scenario would mean we’re looking higher after it completes, and likely into new all-time highs in the coming months and quarters.
But because it’s still a valid (1)-(2) and not negated by Elliott Wave Theory rules, it remains in play. Therefore, I’m currently looking for five down in either the green primary or yellow alt. It’ll be challenging to discern the difference between the two in the near term, but, ultimately, the difference will come down to the size of the structure and how it approaches the support at the 100% extension, as well as holding that 100% extension.
That being said, the price action this week has provided a potential five-wave down move in the making. Currently, there are only three down total, but it has hit the Fibonacci extension target for a third wave in a typical five-wave down structure, and we’re only seeing three up from that low, which would indicate a fourth wave in progress.
The key point to understand is the size of this five down will either require a very extended fifth to reach the alt (C) scenario, or it’ll find the typical 200% extension level. In the latter case, it’s likely to be wave 1 of (3) of the larger circle C wave (shown below), meaning the odds of my $60s and $70s lows would regain ground in probability. If it’s wave 1 of (3), we could see a significant downside move in the next month (perhaps triggered by earnings in late September).
The major differentiator will be how far this five-wave down move off the recent highs goes, and if we see a three-wave bounce following it or a five-wave rally begin. By the end of this week, I expect us to have at least the first part covered, and next week, we’ll see what kind of bounce we get.