Micron Technology, Inc. (MU) is back among the living, but it’s far from a zombie.
That’s right. After napping in a shallow grave for four months, the semiconductor stock has finally awoken. With today’s 7% launch, MU stock is now up 46% since bottoming last month. In a go-nowhere, do-nothing market, Micron is shining bright.
Today’s pop carried shares of Micron back above the 200-day moving average for the first time since its dastardly descent began. MU lovers are eyeing its budding uptrend with keen interest. The last time Micron started trending from these lowly levels, it ran from $5 to $35. Although this time may well be completely different, profit seekers are certainly hoping MU stock finds the magic once more.
With the price trend now pointing higher, many other chart indicators have joined the bull camp. The popular RSI indicator recently tagged its highest levels in two years suggesting Micron stock buyers are showing strength we haven’t seen in … well, two years.
Volume patterns have also turned in favor of buyers. Accumulation days are piling up while distribution days have all but disappeared. That means the majority of participants are piling in on up days while few are abandoning ship on down days.
Micron is reporting earnings on June 30, so be aware that may throw a wrench into the party. On the bright side, the past few announcements have been veritable snooze-fests, so here’s hoping next week’s event doesn’t derail the uptrend.
Trading Micron (MU) Stock
Traders looking for a limited risk way to play continued strength could use options instead of buying stock outright. I suggest buying the Oct $13 call option for around $1.85.
To further cut the cost, you could sell the Oct $17 call for 41 cents, creating an Oct $13/$17 bull call spread for a net debit of $1.44.
The risk is limited to the initial cost of $1.44 and will be forfeited if Micron sits below $13 at expiration. The max reward is limited to the distance between strikes minus the net debit, or $2.56, and will be captured if the stock can rise above $17 by expiration.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.