The four-day 15% jump in Micron Technology, Inc. (MU) has more than a few bulls perking up.
If you’re one of them and are wondering if the sudden strength in MU stock is the start of something bigger, something with the potential to shower profits into your account, wonder no longer.
The answer lies below.
MU Stock Chart
First, some background. Despite its rousing rally, MU stock remains 70% off its December 2014 peak.
Like Icarus, Micron flew just a bit too close to the sun and has been punished for its hubris ever since. Speculators pulled too many future gains forward during the epic bull run of 2013/2014 and are now receiving their comeuppance.
But let’s not kick the bulls too much while they’re down. The price action in Micron stock does leave some room for optimism. This year has been one of base building for MU. Such neutrality is exactly what is needed to improve the posture of its ailing trend.
The million-dollar question is whether or not Micron can muster the strength to rocket higher off the five-month base.
And that, friends, remains to be seen. Thus far Micron’s pop has simply ushered it from the lower end to the middle of its multimonth base. To get really excited we need MU to breach $12.
For now, the intermediate-term trend is decidedly neutral. So let’s not get too excited just yet. In the short run, MU stock may just move a bit further toward the upper end of its range. Call the aforementioned $12 level your target.
To the bottom fishers out there eyeing the action with increasing interest, I don’t blame you. If you’re wading into the waters here, consider using the low of the base near $9.30 as your exit. If we take that out, the past five months of constructive price action will be rendered moot.
Oh, and if the $11.10 price tag is somehow too expensive for you, the options in Micron stock are fair game. The liquidity is glorious. Bulls can snatch up the Oct $11 calls for around $1.60 right now.
At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.
