Technials Point to More Micron Might

by Serge Berger | September 5, 2013 11:20 am

Very much like the stock of Alcatel-Lucent (ALU[1]), which I discussed here yesterday[2], Micron Technology (MU[3]) has been trading in the shadows of its heydays for more than a decade.

For a little perspective, see the below chart looking all the way back to 1999:

MicronLongterm
Click to Enlarge

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.

MicronMultiyear
Click to Enlarge

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[4]) — 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.

MU closer up[5]

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[6]. Sign up for his free Weekly Market Outlook Video here[7]. As of this writing, he did not hold a position in any of the aforementioned securities.

Endnotes:
  1. ALU: http://studio-5.financialcontent.com/investplace/quote?Symbol=ALU
  2. I discussed here yesterday: http://investorplace.com/2013/09/altacel-lucent-stock-is-acting-outright-giddy/
  3. MU: http://studio-5.financialcontent.com/investplace/quote?Symbol=MU
  4. SMH: http://studio-5.financialcontent.com/investplace/quote?Symbol=SMH
  5. [Image]: http://thesteadytrader.com/wp-content/uploads/2013/09/MU-closer-up.png
  6. The Steady Trader: http://thesteadytrader.com/
  7. free Weekly Market Outlook Video here: http://www2.marketfy.com/l/15492/2013-05-06/4sf47

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