Chip bloodbath reversed overnight by blockbuster Micron earnings — momentum boun
Thesis
Earlier this week, a global chip sell-off erased massive value from the market, pushing the Nasdaq down 2.4% and spooking investors. However, Micron just reported earnings that blew past expectations, sending its stock up over 16% pre-market and sparking a massive rally in S&P futures. This combination of washed-out sentiment followed by a definitive fundamental catalyst creates a classic relief rally setup. Traders who were forced to sell yesterday are now facing a gap-up open and potential FOMO, providing strong upward momentum for the chip stocks that were hit the hardest.
Strategy approach
Build a long strategy on MU and SMCI using the D1 timeframe. Enter when the broader Nasdaq 100 (QQQ) closes up >1.5% (recovery momentum) and MU closes up >5% on volume >150% of its 20-day average. Exit on a 8% trailing stop or a 14-day max hold period.