Micron Technology, Inc. (MU) Stock Breakout Demands a Buy

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Semiconductor stocks were flying high Tuesday amid widespread accumulation. Money flooded into Advanced Micro Devices, Inc. (NASDAQ:AMD) and Micron Technology, Inc. (NASDAQ:MU) all day long delivering eye-popping breakouts. The former added 10% to its share price while the latter tacked on 5%. Both charts are worthy of your attention, but today we’re doing a deep dive on MU stock.

Micron Technology, Inc. (MU) Stock Breakout Demands a Buy

Source: ©iStock.com/lef2481

What began as a humble bottoming attempt has grown into a profit-giving giant.

Since finally finding a floor mid-year at $9.35, Micron shares have doubled in value. Not bad for a beaten-down, left-for-dead semiconductor stock.

The recovery has been sufficient in turning the sluggish 200-day moving average higher, confirming the turnabout in MU’s long-term trend.

Thursday’s breakout completed a two-month base which digested the stellar gains accumulated during the summer rally. The resistance breach confirms that buyers’ appetite has yet to abate and that suggests a year-end MU stock rally is upon us.

Micron suffered a large down-dap last June following disappointing earnings. That price void should act as a magnet for MU shares moving forward.

MU stock

Source: OptionsAnalytix

First up is the retest of the gap area at $20.70 (roughly 5% higher from here). Any kind of probe into the gap area has the potential to fully fill the gap, which would carry Micron back to $23.70.

The MU Stock Option Trade

Micron’s soaring share price has dampened demand for options, and that means prices have been driven into the ground. That’s bad news for option sellers relying on juicy premiums for profits, but good news for option buyers looking for a directional bet. If you want a low-risk trade positioned to thrive if MU stock continues trending, buy the Jan $18 calls for around $1.90.

The risk is limited to the initial $1.90 debit and will be lost if Micron sits below $18 at expiration. The reward is unlimited, so consider yourself locked and loaded should the bulls really press their advantage into the holiday season.

At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/11/micron-technology-inc-mu-stock-mu-buy/.

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