Micron Extends Rally as Analysts Weigh In on the Market

Bullish Price Channel Remains Intact

Micron Technology, Inc. (MU) shares opened about 1.5% higher on Wednesday morning after favorable analyst commentary added to the bullish sentiment following the Goldman Sachs technology conference earlier this week.

KeyBanc analysts predicted that NAND supply growth would decelerate to 28% in 2019 – sharply lower than the 47% growth last year – and that there could be supply shortages by year end. The firm predicted that NAND and DRAM prices would stabilize during the second half of the year, which would bode well for Micron, Western Digital Corporation (WDC) and others in the space.

On Tuesday, shares rose sharply higher after Micron CEO Sanjay Mehrotra said that he continues to see healthy end market demand and still expects a strong second half of the year. The company continues to work through its high inventory levels during the first half of the year, and output growth is projected to drop "quite a bit" this year as inventory levels even out to match demand.

Technical chart showing the share price performance of Micron Technology, Inc. (MU)

From a technical standpoint, the stock rebounded from lower channel support to prior highs and R1 resistance at $41.43 during Wednesday's session. The relative strength index (RSI) appears a bit lofty at 63.11, but the moving average convergence divergence (MACD) remains in a bullish uptrend. These indicators suggest that the stock could have a little more room to run before consolidation.

Traders should watch for a breakout from R1 resistance and prior highs to the upper end of its price channel near R2 resistance and the 200-day moving average at about $45.00. At that point, traders could see consolidation between $41.00 and $45.00. If the stock moves lower, traders could see a move back down to retest support at around $38.00. A breakdown from those levels could lead to the pivot point and 50-day moving average at $35.50, but that scenario is less likely. 

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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