Shares of Micron Technology, Inc. (NASDAQ:MU) rallied along with the rest of the stock market following Trump’s U.S. presidential election victory. After reaching my near-term upside price target in the latter part of November, MU stock began to run out of steam and has since taken a breather.
While Micron stock remains constructively positioned through a multi-month lens, the near-term direction likely will be determined by its upcoming earnings report, slated for Dec. 21.
When I last discussed shares of Micron Technology on Nov. 16, I offered that the group and sector rotation that we were seeing (and continue to see) would likely soon move into semiconductor stocks. A few days later, MU had rallied 10% and reached my price target of $20.
While MU stock has taken a breather over the past few trading days, sector and group rotation within the stock market has continued. And depending on how Wall Street chooses to react to earnings, another push in Micron might still be in the cards.
MU Stock Charts
Looking at Micron’s multiyear weekly chart, we see that the post-election rally, which was just an extension of a multi-month rally that began in May, arrived at a technical confluence area of resistance by late November.
This area is made up of the red 200-week simple moving average, the 38.3% Fibonacci retracement of the entire selloff from the 2014 highs down to the 2016 lows, horizontal resistance, as well as the upper end of the uptrending channel of the 2016 rally.
That’s a lot of technical resistance to come together in one spot. So it should be of no great surprise that we saw Micron take a breather here.
Also from this perspective, however, note that at the latest, a break above the $20 area would likely lead to a next upside target closer to the $23-$24 area.
On the daily chart, we see that the post-election rally had a steep and relentless character to it for a couple of weeks. But once horizontal resistance was reached near the $20 level, MU stock lost momentum and pulled back.
Thus far, this pullback is nothing to be afraid of. Micron still trades above both its 50- and 100-day simple moving averages (yellow and blue lines, respectively), which at the margin should support the stock for the time being.
When Micron Technology reports earnings on Dec. 21, the stock would have to break and hold below the $17 area on a daily closing basis to do more serious damage. In that case, traders may try to play the stock lower into the $15-$16 range.
If MU stock holds up or even rallies after earnings, however, then a next rally attempt to break above the $20 mark may well be in the cards. The $23 area would be a next upside target over the next few weeks (or months).
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