Micron Stock: Buy the Dip or Bail After Post-Earnings Decline?

Micron stock is dipping lower on earnings, but it's not collapsing. Here's what the chart says now.

Micron  (MU) - Get Micron Technology, Inc. (MU) Report shares are down about 1.75% on Wednesday after reporting earnings.

However, despite the post-earnings dip, shares are rallying off the lows. At one point, the stock was down around 4% on the day and that’s after yesterday’s 2.8% decline.

The company beat on earnings and revenue expectations, which is likely helping it bounce from the lows.

However, the “muted” outlook for next quarter is responsible for today’s dip.

Last week, TheStreet’s Jim Cramer said he would be a buyer of Advanced Micro Devices  (AMD) - Get Advanced Micro Devices, Inc. Report and Nvidia  (NVDA) - Get NVIDIA Corporation Report if these two stock saw weakness as a result of Micron’s report.

So far, they’re down slightly on the day.

With the rally off Wednesday’s low, Micron is holding up above the prior September low. That said, the charts leave a lot to be desired.

Trading Micron Stock

Daily chart of Micron stock.

Daily chart of Micron stock.

TheStreet Recommends

A look at the chart shows exactly what I mean by “a lot to be desired.” Even though Micron broke below the prior September low at $71.11, the silver lining is that the stock was able to reclaim this level and bounce higher.

However, there are plenty of downsides. For example, Micron stock is still below the key $76.40 level. It’s also below all of its daily moving averages.

In order to make a significant push higher, some of these levels will need to be reclaimed.

Specifically, I want to see if Micron stock can rally back to and reclaim the 50-day moving average. 

This measure has been notable resistance for two months now and even though the stock looked like it was going to push through it earlier this week, the shares were eventually swatted lower.

If Micron stock can clear the 50-day moving average, that puts the $76.40 level in play, followed by the 200-day moving average and downtrend resistance (purple line).

Below Wednesday’s low puts the August low in play, at $68.81. A break of this mark could put the stock in a difficult position unless $68.81 is reclaimed. 

Nvidia and AMD are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells NVDA or AMD? Learn more now.