Weekend Market Report
Good morning and welcome to another edition of the Weekend Market Report. This week we drop some links on nuclear energy, everyone’s misunderstood Micron Technology (MU), wonky consultants, and our usual gold and silver price forecasts.
Wait, there’s more! We’re (re)introducing the 5 day S&P500 historical volatility price directional forecasts and we highlight a new stock that we’re keeping a lazy eye on for trend trading reasons.
The Stage Is Being Set for an American Nuclear Power Revolution
I’m a big fan of Nuclear energy production. The main reason is that it’s very efficient and it’s a great way to keep more greenhouse gases in our atmosphere.
Congress passed a bill to help reinvigorate the anemic U.S. nuclear industry, with the support of President Biden and 88 senators. Not a single Republican voted against it.
Great news but we have a long way to go on this. Nuclear energy production is forecasted to drop over the next few years.
Given such slow progress toward replacing aging infrastructure, the Energy Department has warned that the nuclear industry will keep shrinking. By 2040, the country is projected to produce 20 percent less energy from nuclear power than it does today.
Read more about it here and read my where are they know article on USEC Inc.
Micron Stock Falls Despite Multiple Price Target Boosts
Here’s one a classic example of how the market is rigged against the retail investor. Micron (MU) - the largest memory chip maker - “falls” in trading after earnings, while simultaneously the big investment house are upgrading it.
Of course the selloff appears to be related to hedge funds disappointed that MU didn’t cash in fully. @DonCorleone77 has a great write up on why sometimes this dichotomy exists.
The fact of the matter is, everyone in the finance game is trying to make money and we can never really know the motivations of all the industry players. That is where you will have to make decisions in an attempt to navigate the investing landscape and determine the best moves based on your investment strategy which, by the way, will be different for different people. For example, if you are a short-term trader, you might spend a lot of time trying to figure out near-term possible swings. On the other hand, a long-term investor might look to invest in companies with strong prospects realizing that there may be ups and downs along the way but, overall, they are comfortable in believing a particular stock will likely go up over time.
Wonky Consultants Are Winning in the Ai Boom
No doubt about it, there are people cashing in on the AI Boom and it’s either NVDA or consultants. Everyone is either selling the gold pans or the deeds.
The next big boom in tech is a long-awaited gift for wonky consultants. From Boston Consulting Group and McKinsey & Company to IBM and Accenture, sales are growing and hiring is on the rise because companies are in desperate need of technology Sherpas who can help them figure out what generative A.I. means and how it can help their businesses.
LOL, all roads lead to Nvidia with their GPUs.
General Market Commentary
The markets had a wild ride this week with a lot of intraweek price volatility. In the end it was the Dow that closed lower for the week with the S&P500, Nasdaq, and Russell 2000 making gains; all to varying degrees.
The gold price forecast model is current 50% correct as last week’s price forecast was for lower gold but it prices rose instead. The silver price forecast model is currently 75% correct as last week’s price forecast was for a lower close this past Friday. We’ll provide model accuracy on the historical volatility (HV) direction for the S&P500 starting next week.
Silver Price Forecast 1 Week Ahead
Silver closed at $29.43 from $29.57 last week, a drop of -0.47%. Last week’s price prediction for a higher Silver close was correct. The model is currently correct for price direction 75% (3 out of 4).
The mean silver price forecast for next week is higher. We are forecasting a possible swing high price of $30.94 and a swing low of $27.47 for next week.
The 4 week outlook for prices looks to be flat.
Gold Prices Forecast 1 Week Ahead
Gold closed up to $2,336.90 from $2,316.40 last week, a rise of +0.88% Last week’s price prediction for a lower close was wrong. The model is currently correct for price direction 50% (2 out of 4).
The mean forecast for the Gold prices is higher for next week. A swing high price of $2,450.12 and a low of $2,215.13 is forecasted.
The 4 week outlook for prices looks to be higher.
S&P500 Historical Volatility Forecast 1 Week Ahead
Last week’s 5 day historical volatility model closed at 0.065. The 5 day historical volatility (HV) for Friday 7/5/2024 is forecast to close higher by next Friday’s close.
The forecast is predicting and elevated HV for the next 4 weeks.
A Look at Micron Technology (MU)
I have to admit that Micron wasn’t on my radar as Nvidia is but I checked it out after the crazy week it’s had. What happened? Well good news happened. Micron released it’s earnings AMC on June 26th and it had a stellar Q3, yet for some reason the market didn’t care and sold off.
MU reported topline “revenue of $6.81 billion versus $5.82 billion for the prior quarter and $3.75 billion for the same period last year.” - via Yahoo News
On top of that CEO Mehrota gave a glowing forecast and guidance going forward.
“Robust AI demand and strong execution enabled Micron to drive 17% sequential revenue growth, exceeding our guidance range in fiscal Q3,” said Sanjay Mehrotra, President and CEO of Micron Technology. “We are gaining share in high-margin products like High Bandwidth Memory (HBM), and our data center SSD revenue hit a record high, demonstrating the strength of our AI product portfolio across DRAM and NAND. We are excited about the expanding AI-driven opportunities ahead, and are well positioned to deliver a substantial revenue record in fiscal 2025.”
With this good news and the stock having traded at an all-time high recently, this sell off smells like a “sell the news” type of event.
It makes sense why Wall Street investment firms are reiterating or upgrading their guidance for MU, they’re going up and growing fundamentally. It also makes sense why they’re being sold too, profit taking and feeling the AI boom might be getting a bit too hot.
No matter what, it’s close to an all-time high now but I wouldn’t consider a position in it until it breaks the all-time high again. Still, this is one to put on your watchlist and keep an eye on.
Where Are They Now?
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