Another day, another new high for the S&P 500. Given the magnitude of the bull run, you would think low-risk entries are drying up. Not so! Surprisingly, my scans continue to pick up a daily deluge of breakout candidates. Micron Technology, Inc. (NASDAQ:MU) finds itself square in the crosshairs as today’s pick.
Micron stock has a number of things going for it. Chief among them is the trend turnaround transpiring over the past quarter. The respectable ascent off its mid-May lows has been sufficient to turn Micron’s 20- and 50-day moving averages higher. MU also has been able to remount its 200-day MA.
Momentum indicators are flashing bullish signals as well. The oft-watched Relative Strength Index (RSI) indicator tagged the overbought zone last month for the first time in ages. Such strength suggests buyers are finally returning to this once-shining stock with vigor.
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While Micron stock’s price action has been a bit choppy of late, a descending trendline (black line in chart) has taken root, providing a clean entry point for a MU breakout.
The MU Stock Trade
Watch for a breach of the $13.60 level to kick off a renewed rally for Micron. Short-term traders looking to bail at the first sign of weakness could use $12.90 as a stop.
If you’re a penny-pincher, or simply looking for a leveraged, high-octane route for playing further upside in MU, consider grabbing the Sep $13 calls for $1.22. The max risk is limited to the initial $1.22 debit and will be forfeited if the stock sits below $13 at expiration. The max reward is unlimited, offering unfettered participation should Micron really go the distance in the months ahead.
Unlike the lion’s share of companies, MU has already reported earnings so buyers can rest easy knowing the quarterly ritual is complete and Micron’s budding uptrend is still intact.
As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.
