Shares of semiconductor stocks as a group have been hit notably over the past two weeks. While anything is possible into quarter end this Friday, a stock like that of Micron Technology (NASDAQ:MU) now looks to point lower yet through a multiweek lens. Active investors and traders can set up trades to position for more downside in MU stock.
For some perspective and to reiterate something I have highlighted for multiple quarters now, large-cap technology stocks in good part have kept the U.S. stock market afloat. Within this sector, the semiconductor stocks play an important part, and the recent weakness in this group now flashes a broader market warning signal.
More specifically as it pertains to Micron Technology, all the indications we are getting from client discussions and sentiment analysis points to MU stock being a momentum chaser’s favorite play.
While I am not here to argue against the fundamentals for Micron Technology as a longer-term holding, many immediate gratification traders often gravitate toward this name for a quick buck. As such, once the tide turns for a name like this, it can easily overshoot on the downside.
MU Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
For some perspective, let’s understand the bigger-picture multiyear weekly chart. Here we see that after a steep blow-off rally into early March of this year the stock quickly plunged to the lower end of its trading range (black parallels). From there it quickly rebounded, only to form a double top by the second half of May.
The stock is now once again on its way toward the lower end of this trading range, and from where I sit it now stands a decent chance of undershooting this range, i.e. work its way toward the yellow 50 week simple moving average through a multi-week/month lens.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the daily chart we see that MU stock took a leg lower by way of a down-gap a few days following its June 20 earnings report. The stock then found immediate-term support at its blue 100-day moving average where it now looks to break through and head lower toward the red 200-day moving average.
Again, while anything is possible into quarter end this Friday June 29th MU stock continues to look heavy and points lower from this angle.
This trade can also be expressed using a very conservative and highly profitable options strategy. This options income strategy produces between eight and nine winners out of any 10 trades with the few losing trades being very small in size. I am holding a special webinar for Investorplace readers on Thursday June 28th to showcase this strategy in detail. Register here.
Access Serge’s Free SSO Strategy eBook HERE — find high-probability trades like a Wall Street professional.
Legendary Investor Louis Navellier’s Trading Breakthrough
Discovered almost by accident, Louis Navellier’s incredible trading breakthrough has delivered 148 double- and triple-digit winners over the last 5 years — including a stunning 487% win in just 10 months.
Learn to use this formula and you can start turning every $10,000 invested into as much as $58,700.
Click here to review Louis’ urgent presentation.