Micron Technology – MU Stock Could Stampede Through October

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Shares of memory chip maker Micron Technology, Inc. (NASDAQ:MU) have rallied 25% so far in October, and while a breather is likely due in the immediate-term, active investors have a clear level of technical resistance to focus on. If MU stock can clear its 100-day simple moving average, we might enjoy a return to upside momentum.

Beat the BellWhen Micron Technology reported its latest batch of earnings on Oct. 1, it came in with profits of 42 cents per share — well better than the 32 cents expected by analysts. While revenues were materially lower on a year-over-year basis, they still came in ahead of expectations while gross margins narrowed by about 6%.

Semiconductor stocks like Micron Technology had been hurting all year while the broader market lost more and more breadth. With the August drop, many semiconductor stocks have exhausted themselves on the downside for the time being, and the price action since has had the characteristics of a medium-term bottom-building process.

MU Stock Charts

Looking at the long-term chart of MU stock, we see that the sharp 60% drop from December 2014 into the August lows erased all of the breakout move that occurred in late 2013 and then some as it marginally broke below the black horizontal. This line has since been overcome again, and Micron stock is now battling resistance at its blue 20-week moving average.

This moving average has served as a good line of reference over the past few years, and a push and hold above it this time around could have bullish implications for at least a few months.

micron stock chart weekly
Click to Enlarge

On the daily chart, we see that the August drop-off was the last hurrah for the bears for the time being, which was followed in late September by a marginally higher low and last week by a higher high versus the early-September highs. Earlier this week, MU stock bumped into the blue 100-day moving average (same as the 20-week moving average on the above chart.

Micron stock has now been consolidating below this moving average for a number of days and the more consolidation occurs here the better the odds of an eventual push higher. Also see that the down-gap from June 26 remains unfilled, which I marked on the chart with the blue box.

micron stock chart daily
Click to Enlarge

Active investors looking to capitalize on a further move higher in MU stock into year-end could look to buy it on a break above $19.50 for an initial price target at $23.

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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. 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/2015/10/micron-technology-mu-stock-stampede/.

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