Shares of Micron Technology, Inc. (NASDAQ:MU) are higher by 48% year-to-date, but you wouldn’t know this by looking at the stock over the past three months. Since early June, MU stock has been in consolidation mode in the broader sense, frustrating the bulls and bears alike. At the current juncture, however, MU stock offers opportunity for market participants looking to put on a trade for the next two weeks at most.
Micron is scheduled to report its next batch of earnings in two weeks’ time, on Sept. 26. Regular readers of my daily column know that I am a big advocate of not holding “trading positions” through earnings reports due to the binary outcome immediately following earnings reports. Much better trading setups occur before earnings reports, and after.
Sector and group rotation, as usual, also has been the name of the game year to date for U.S. stock investors and traders. Large-capitalization technology stocks such as Micron largely outperformed into the early summer period but have consolidated since.
The question now is whether these stocks have one more leg higher left in them in 2017.
MU Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
Looking at the multiyear weekly chart, we see that MU stock through this lens has a well-defined potential next upside target at the purple horizontal line, which marks the previous multiyear highs from December 2014.
Those highs around the $36.50 area are about 10% higher from where the stock closed on Friday.
Moving averages legend: red – 200-day, blue – 100-day, yellow – 50-day
Through the lens of “trend-following,” which in my eye remains one of the most profitable and time-tested investment strategies over time, MU stock’s most recent up-trend since May 2016 remains intact. After slipping about 20% from its June 2017 highs into the August lows, MU stock found support right at the trend line, which also roughly coincided with its red 200-day simple moving average.
The recent multiweek rally now has MU stock firmly pushing up against its previous year-to-date highs from June, around the $33 mark.
Traders looking for a continuation rally play could look to buy MU stock around $32.50 or higher for a move toward $35 or $36. It is important, however, to get out of the stock upon any strong daily bearish reversals and ahead of the upcoming earnings report.
Check out Serge’s Daily Market Outlook for Sept. 11.
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