The great thing about healthy stock market corrective periods such as we are currently seeing is that we can pick up stocks we liked before the correction at significantly better prices. Case in point, shares of semiconductor company Micron Technology, Inc. (NASDAQ:MU), a stock that thematically (through a multimonth lens) I even liked at the January highs, have pulled back nicely along with the broader market and now offer an opportunity to be bought 15% cheaper.
So you know, Micron is scheduled to report its next batch of earnings on March 22, or about five weeks from today. Although longer-term stock holdings can easily be held through earnings reports, more near-term-oriented swing trades are best to be exited or reduced in size through earnings reports so as to avoid the uncertainty of immediate-term price swings.
Although stock market volatility has notably picked up over the past two weeks, thus far from an economic growth perspective nothing much has changed and in my view, large-cap technology names such as MU stock remain a good buy.
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MU Stock Charts
Click to Enlarge
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
To give us some perspective on all of this, let’s take a look at the bigger picture weekly chart. Note that after a strong first 8 months in 2017 MU stock went into vertical overshooting mode and by second half of November simply got exhausted.
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From there, the stock slipped into a consolidation phase that lasts to date but has a well-defined horizontal area of support around $39, which currently also roughly lines up with the stock’s 200-day simple moving average.
Click to Enlarge
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
Note that last Friday, MU stock came within one point of its red 200-day simple moving average but then rallied back higher in the afternoon session as the broader market received a bid. This also led the stock to close back above the aforementioned horizontal support area and left behind a long bullish hammer tail candlestick on the daily chart.
From here, while it is preferable to see a solid follow-through buying day following last Friday’s intraday bullish reversal before buying, more aggressive market participants could look to buy MU around current levels using a last-resort stop loss near last Friday’s lows of $37.50 with a first upside price target around $45.
Check out Serge’s Daily Market Outlook for Feb. 12.
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