If there's a single word I'd use to describe recent market activity it would be "volatile."

During the July 21 trading week, the S&P 500 hit an all-time high at 1,991. Within two weeks, the index shed more than 4%, dropping to a low of 1,905. This week, it surged to yet another new all-time high.

While I am concerned about what could be negative momentum,divergence based on the Moving Average Convergence/Divergence (MACD) on the daily chart, I still have to respect the S&P's ability to rally in the face of a dicey geopolitical environment.

One sector I am excited about is tech. According to Morningstar, technology has been the top-performing sector in the past year with a 32% return.

Within the tech sector, memory chip supplier Micron Technology (Nasdaq:MU) is a leader. Over the past year, shares have brought traders outstanding returns of more than 135%! And the bullish technical and fundamental outlook makes the stock an attractive buy in my book.

Strong demand for Micron's specialized DRAM and NAND flash memory products have been driving growth. DRAM chips are used in personal computers, while NAND flash chips are used in smartphones and tablets.

Because of the increasing use of smart devices, Micron expects NAND demand to increase 38% a year in the next four years. Demand for its DRAM products is expected to rise 25% a year over the same period.

Strategic partnerships utilizing Micron's chips should help contribute to robust growth. The company just announced Inspur computers will use its latest generation 8Gb DDR3 SDRAM components in several of its products to "deliver high-performance, power-efficient servers targeted at cloud data centers and high-performance computing applications."

Additionally, Micron has become a supplier to Apple (Nasdaq:AAPL) through its acquisition of Micron Memory Japan (formerly Elpida). It also recently acquired Micron Memory Taiwan (formerly Rexchip Electronics). And the company's part interest in Inotera and Tera Probe should further its abilities to produce specialized memory devices.

From a technical perspective, shareholders certainly have reason to cheer.

MU Stock Chart

MU bottomed in October 2012 at $5.16. Shares then formed a major uptrend, and in less than two years, the stock is up more than six-fold!

This advance has been almost without pause except for a small consolidation period in the spring of 2013. In mid-July 2014, shares hit a multiyear high of $34.85. Since then, the stock has retreated moderately, finding nearby support at the important round number of $30.

MU hovered near support for two weeks, but has since moved back toward its previous high. A small basing pattern took the form of a rectangle marked by the $34.85 peak and low near $30.

If the stock can penetrate $34.85 resistance, it should soar as there would be no overhead supply to cap the advance. According to the measuring principle for a basing pattern, calculated by adding the height of the pattern to the breakout level, the stock could potentially reach a new multiyear high of $39.70 ($34.85-$30 = $4.85; $4.85+$34.85 = $39.70).

At current levels, this target presents traders with 20% potential returns. A more cautious trader may choose to minimize risk by waiting until the stock trades above $34.85, which could still result in a 14% gain.

The bullish technicals are supported by upbeat fundamentals.

For the upcoming fourth quarter, scheduled to be reported in October, analysts project revenue will increase 46% year over year to $4.15 billion. And earnings are expected to surge four-fold to $0.80 per share from $0.20 in the year-ago quarter.

For the fiscal 2014 year, ended in August, analysts are looking for an 80% revenue increase to $16.3 billion. Full-year earnings are expected to stage an impressive turnaround from a loss of $0.18 per share in fiscal 2013 to a $3.21 profit this year.

In addition to an exceptional growth outlook, the company is well-valued based on its expected five-year PEG ratio (price-to-earnings ratio divided by earnings growth rate) of 0.5. Typically, a PEG of 1 or under shows attractive valuation.

Risks to consider: While Micron is on a strong growth curve, it's operating in a highly competitive sphere. Samsung and SanDisk (NASDAQ:SNDK) are major players in the semiconductor market. However, the company has carved a niche for its products and will likely continue to protect it in the future.

Recommended Trade Setup:

-- Buy MU at the market price
-- Set stop-loss at $29.89
-- Set initial price target at $39.70 for a potential 20% gain by late 2014

Note: My colleague Amber Hestla is also bullish on Micron. But instead of buying shares outright, she recommended selling puts on MU. With this strategy, she has an opportunity to own shares at a major discount to current prices or generate an annual gain of 65%. Amber just closed her 66th straight winning trade, so if history is any indication, her MU trade should turn out well. You can learn more about her put selling strategy here and see her first 52 trades here.

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