Buy or Sell Micron on Earnings? Here’s What the Chart Says - TheStreet

Buy or Sell Micron on Earnings? Here’s What the Chart Says

Micron stock keeps trying to move lower as the earnings report approaches, but it also keeps holding key support. Here's the chart view.
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Micron  (MU) - Get Report is about flat on Monday despite the rally in the overall stock market.

With the Nasdaq up more than 1%, Micron would seem a great candidate for a pre-earnings trade. The company is due to report earnings on Tuesday after the close.

But a negative report on the stock from Citi analysts has soured the mood a bit.

Still and all the bulls continue to step up and buy the Boise, Idaho, chipmaker. With strength in chipmakers and semiconductor stocks, it’s hard to leave Micron out of the bunch.

With only one more session before earnings, we might not get too big a move. But let’s look at the key levels in Micron to get an idea of how to navigate this stock.

Trading Micron Stock

Daily chart of Micron stock.

Daily chart of Micron stock.

I really like the way Micron gapped up over the 50-day moving average in mid-September. The name bubbled below the 200-day moving average for a few sessions before pushing through this level and challenging $52 resistance.

Unfortunately, $52 resistance held firm, while Micron stock failed to hold the 200-day moving average as support.

But it continues to hold the 20-day and 50-day moving averages as support. That is constructive for the bull case, as investors are clearly waiting for earnings and more clarity before deciding what to do next.

If the reaction is bullish, look to see that the bulls take Micron back over the 200-day moving average and close it above this mark.

Ideally, the stock will be able to break out over $52 and challenge the June high up at $54.82. That comes into play almost right at the 78.6% retracement. Above that and the upside opens up a bit, potentially putting $60 in play.

On the downside, it seems like too tight of a range to ask for the 50-day moving average to hold as support on a non-bullish reaction, but it’s possible. 

If Micron stock loses the 50-day, it puts the 50% retracement and gap-fill in play near $46.

Below that and the September lows are in play at $44.45, followed by the August lows at $42.25.

Let’s see where Micron stock closes on Wednesday, its first trading day after the earnings report, and then use the above layout to plot the next most-likely move.