2 Bullish Ways to Play the Earnings Fallout in Micron Stock

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In an increasingly volatile and headline-driven market, is Micron (NASDAQ:MU) stock worth buying? Following the company’s recent earnings report, MU seems to have lost market favor.

Looks like This Momentum in Micron Stock Is for Real
Source: Charles Knowles / Shutterstock.com

It was a difficult week with news of a whistleblower and impeachment proceedings. Plus, the week ended with rumors of President Donald Trump delisting Chinese companies from U.S. markets. For the S&P 500, the end result was a loss of nearly 1% — and a roughly 2% loss for the tech-heavy Nasdaq Composite.

Market heavyweights and tech peers such as Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB) did a good deal worse for the week. But for MU investors, immediate conditions turned even more frightening.

Micron’s Thursday evening earnings release appeared to be the nail in the coffin leading into the seasonally weak month of October. MU shares tumbled 11% on Friday and 12% for the week following the memory specialist’s mixed fourth-quarter results.

In a nutshell, Micron delivered a profit and modest sales beat, mostly in-line guidance and a cautious, but positive outlook. Not bad, right? But massive year-over-year declines in financial performance, the trade war’s impact on sales to Huawei and geopolitical stressors appear to summoned investors’ collective wrath.

MU Stock Weekly Chart

Source: Charts by TradingView

Last week wasn’t a great one for investors carrying shares into earnings. But for those that see the fallout in shares as overkill, there’s some good news. Micron remains in a constructive and well-supported position on the price chart.

With Friday’s selloff, MU is now testing its uptrend for support as it challenges a key technical area from roughly $39.50-$43.50. The price zone is backed by the 50% and 62% levels. These relate to this summer’s higher low and the 40-week simple moving average.

Is today’s test of zone support the end all, be all for MU stock? Not by any stretch. There’s a case for shares down at channel support near the $35-$36 range. This is perfect for investors wishing to play Micron as a long position. That being said, I’d recommend treading lightly.

For stock traders looking to go long MU, I’d advise waiting on conditions which become oversold on the weekly time frame during October before considering a purchase. Another option is to buy a fully formed and confirmed candlestick reversal pattern. That’s one way to purchase Micron stock with less risk in today’s market.

Investment accounts under Christopher Tyler’s management currently own positions in Micron (MU) and its derivatives but no other securities mentioned in this article. 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, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.

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 market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.


Article printed from InvestorPlace Media, https://investorplace.com/2019/10/bullish-play-earnings-micron-stock/.

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