Micron Technology (NASDAQ:MU) investors are taking another less-celebrated stroll down memory lane for a fourth straight week. But if you’re a contrarian looking to buy an ever-volatile Micron stock in value territory on the price chart, then the time to go long is here.
Let me explain.
A less-than-hot summer for MU stock has turned even chillier this fall for bulls. Following a first half rally in 2018 that vaulted shares up about 50%, it has been all downhill for MU stock investors with shares giving up all those gains and now underwater by nearly 6%.
The latest damage to the Micron stock price comes courtesy of Susquehanna. Shares fell 2.72% Tuesday following a somewhat bearish call, which cut the memory specialist’s rating from positive to neutral. The firm cited industry checks indicating weaker demand from cloud-computing providers and a tighter spending environment for the first half of 2019.
Playing into its cautious forecast, Susquehanna drastically reduced its price target on Micron stock from $75 to $45 a share.
Some investors may scoff at Tuesday’s cut as a bit late to exit the party. Still, the firm did initially turn positive on MU stock back in June 2016, with shares near $11. Nevertheless, with later calls on Micron a bit less prescient and maybe even greedy, a price check of the MU stock chart is showing promising technical value for going long in today’s fearful market.
Micron Stock Weekly Chart
Periods of fear and greed are no stranger to Micron stock. And as the weekly chart of MU easily illustrates, we’re currently in the grips of the former. But as those cycles always wind up surrendering and MU shares have made their way into a key support zone. Putting it all together, going long Micron stock today makes sense.
Highlighted in yellow on the price chart, Micron is testing a weekly hammer low from February that found support slightly above a large corrective cup high of $36.59. Tuesday’s low breached the low water mark by 11 cents before reversing higher, which, optimistically speaking, could mark a bullish turn in shares.
Bottom Line on MU Stock
With the modest undercut in Micron stock also backed by the 50% retracement level, lower Bollinger Band and an oversold stochastics setup looking close to turning higher, there’s definitely technical value and reasons to support a bullish intermediate low. For like-minded investors that sense a bottom in Micron stock could be nearby, I’d recommend using this week’s still-developing candlestick for guidance. If a reversal pattern forms by the end of the week, that’s one way to enter into MU in conjunction with a trailing stop.
Alternatively, a less-exact technical approach would be to simply get long and set a 7% stop. With shares at $38.68 that sets the exit at $35.90. That’s a couple percent below the prior cup high and 50% retracement level. And in my view, that might be a better way to keep investors out of harm’s way in the near term and well-positioned for the longer term.
Disclosure: Investment accounts under Christopher Tyler’s management currently own positions in Micron (MU) and its derivatives. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
