Micron: MU Stock Has Double-Digit Upside

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Shares of semiconductor company Micron Technology, Inc. (MU) moved rallied in an orderly fashion over the past two trading days, aided by positive comments from analysts. From a technical perspective, MU stock (like many of the semiconductor stocks) has wiggled itself into a bullish pattern through a multiweek lens, which is allowing active investors and traders to clearly define their risk for trades to the upside into year’s end.

beat the bell stock investing adviceLast Friday, Nomura came out with a positive note on Micron and competitor Intel Corporation (INTC), which has since lifted both stocks. Specifically, the analyst noted that after Intel’s guidance that called for further stabilization of the PC market, shares of MU stock are likely still trading at a discount as DRAM prices should keep the bid. Nomura has a “buy” rating with a $40 price target on Micron.

MU Stock Charts

Looking at MU stock through the lens of the long-term weekly chart, we note that after bottoming in late 2008, Micron shares formed a series of higher lows in 2011 and 2012. However, the stock didn’t really begin to accelerate higher until 2013.

By June 2013, MU stock had broken past a three-year line of resistance, and by November 2013, Micron had managed to overcome the $18.50 area, which previously had acted as resistance since late 2002. The move since 2013 has trended very strongly, and every dip was a buying opportunity, with a few consolidation phases sprinkled in between. By July of this year, MU stock exhausted itself and settled into a multimonth sideways trot that found excellent technical support near the rising 200-day simple moving average in mid October, when the broader market averages also bottomed.

In other words, through this longer-term lens, Micron stock remains well in its multiyear uptrend pattern where buying the dip is the high probability strategy for directional investors and traders.

micron mu stock weekly
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On the daily chart, we see that the entire consolidation phase since July can also be looked at as a so-called inverse head-and-shoulders pattern, marked by the blue bubbles — left shoulder, head and the right shoulder. Last week, MU stock held support at the 50-day simple moving average (yellow line), which was followed last Friday with a break out of a smaller multiweek consolidation phase.

With the recent two-day rally, MU has not again reached the upper end of the multimonth consolidation phase, and on Monday the stock actually marginally broke out of this pattern.

micron mu stock chart daily
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The higher low from Nov. 17 at the 50-day moving average, also looked at as the right shoulder of the pattern, is the pivotal low that active traders and investors can focus around. On the upside, MU stock now looks to be ready to target the $38-$39 area over the next few weeks to months.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2014/11/micron-technology-inc-mu-stock-has-double-digit-upside/.

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