Watch Micron Stock Near This Incredibly Important Level

Investors should keep an eye on Micron (MU) stock Tuesday. Shares are surging almost 5% in the first trading day of 2018, but that momentum needs to continue.

Why? Although Micron had a miraculous 2017 by climbing almost 90% -- even doing better than Nvidia (NVDA) stock -- shares are struggling to break through its previous highs. Micron stocks desperately needs to push through the $48 level, otherwise concerns will begin to rise, TheStreet's Jim Cramer said on CNBC's "Stop Trading" segment.

Look at it this way: Micron "crushed" earnings estimates in late-December and the stock now trades at just five times forward earnings, Cramer noted. That's a palty valuation despite the company's robust growth. However, that valuation is investors' way of saying they are concerned about NAND and DRAM pricing.

We know that NAND pricing has already peaked and the concern now is that DRAM pricing is peaking as well. In the immediate trading after earnings, it looked like Micron stock would break through resistance near $48. However, that wasn't the case.

Should Micron fail to do so, investors will have to worry about the end of the supply/demand story that drives this company's results, said Cramer,who also manages the Action Alerts PLUS charitable trust portfolio.

Micron has been "one of the best performing stocks," said Cramer. But it's important to keep an eye on it going forward, as the stock will also impact companies like Lam Research (LRCX) , Applied Materials (AMAT) and KLA-Tencor (KLAC) .

Nvidia is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells NVDA? Learn more now.

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