Micron Technologies, Inc. (MU) is a diversified semiconductor maker concentrating in chips for four segments: storage, mobile devices, computers and industrial products.
The stock closed Monday at $43.71, up 99.4% year to date and in bull market territory at 103.4% above its 52-week low of $21.49 set on Jan. 19. The stock set its 52-week high of $49.89 on Nov. 22, and it is in correction territory since then, down 12.4%.
Analysts expect Micron to post earnings per share between $2.12 and $2.23 when it reports results after the closing bell on Dec. 19. Most analysts expect solid year-over-year gains for both earnings and revenue, although some say that margins are on the verge of seeing tightening pressures. (See also: 2018 Will Be Mixed for Chipmakers: Morgan Stanley.)
The daily chart for Micron
The daily chart for Micron shows that the stock has been above a "golden cross" since Aug. 1, 2016, when it closed at $13.56. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average and indicates that higher prices lie ahead. This has obviously been the case for Micron stock, which set its multi-year intraday high of $49.89 on Nov. 22. Note how the stock has been tracking its 50-day simple moving average, which is now at $32.37.
The weekly chart for Micron
The weekly chart for Micron ended last week negative but will be upgraded to neutral this week if the stock closes Friday above its five-week modified moving average of $42.99. The stock is well above its 200-week simple moving average at $24.39 and has been above this "reversion to the mean" since the week of Dec. 23, 2016, when the average was $20.25. The 12 x 3 x 3 weekly slow stochastic reading is projected to decline to 66.63 this week, down from 74.18 on Dec. 15.
The horizontal lines on the weekly chart represent the Fibonacci retracement levels of the huge stock crash from $97.50 in July 2000 to the low of $1.59 during November 2008, when the stock was considered an "option on survival." I view any stock trading between $1 and $3 per share as an "option on survival," as the price paid could be totally lost. Obviously, this was not the fate of Micron. However, the Nov. 22 high of $49.89 was a failed test of the 50% retracement of $49.55. The 38.2% retracement of $38.23 is a key level to hold on weakness.
Given these charts and analysis, my trading strategy is to buy weakness to my semiannual and quarterly value levels of $34.94 and $32.91, respectively, and to reduce holdings on strength to my weekly risky level of $46.32. (For more, see: Chip Stocks at Support After 3-Week Pullback.)