Micron Rebounds After China Bans Chips, But Market Cycles Say More Downside Looms

Micron Technology, Inc. MU traded 2.6 percent higher on Thursday, bouncing back after China imposed an injunction on its chips earlier this week, which pushed shares lower.

On Tuesday, Taiwanese chipmaker United Microelectronics Corp UMC announced that the Fuzhou Intermediate People's Court had ruled that Micron had infringed on its patents. This led to the preliminary injunction, which would stop Micron from selling 26 products in China. However, today Micron reiterated its quarterly sales guidance, emphasizing that the injunction would only impact its overall sales by 1 percent. Investors found comfort in the affirmation, pushing shares higher.

In analyzing the weekly chart below, we can see that Micron is in the declining phase of its current minor cycle. After this we see a bounce, but we expect that to fail below the peak for the current intermediate cycle. As such, Micron may drop further as the downward pressure from two cycles converge, possibly into October.

Micron Technology Stock Chart with Weekly Bars

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