For a little perspective, see the below chart looking all the way back to 1999:
What once was a high-flying stock trading close to the $100 mark has been confined to a trading range between roughly $2 and $18 since late 2002.
However, the above chart — while nice to see — doesn’t help us a great deal in the more near- and medium-term technical analysis of Micron stock. Thus, I zoomed into a chart looking back to 2002 to draw some more meaningful lines of support and resistance.
The first obvious line of resistance is near the $18 mark, which is roughly $3 (or 20%) above MU’s current price.
Next, note that in March of this year, Micron busted past a multiyear diagonal resistance area, after which it consolidated just north of said resistance line, which ultimately led to a tireless rally into yesterday’s highs.
The steep rally in Micron stock so far tallies up to 140% year-to-date, which Wednesday trading further topped off on massive volume of almost 118 million shares. Wednesday’s 5.3% rally came on the back of positive comments about the company from Sterne Agee’s Vijay Rakesh. Semiconductors as a group — and as measured by the Market Vectors Semiconductor ETF (SMH) — also had a great day yesterday, which further speaks to possible sustainability in the rally by Micron.
While Wednesday’s rally didn’t close MU at a new year-to-date high, Micron did manage to gap out of a multiweek consolidation phase on huge volume, which from a pure technical perspective is not something I can assign much bearishness to.
From a medium-term point of view, Micron stock has important support near the $13.50 area. If it can keep up its momentum, MU might just be able to move toward the $16 area in the not-too-distant future.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.