Ahead of the print, traders were cautious on Micron for its tendency to slip on earnings, particularly as the industry continues to look for a bottom in the memory space. Even more so though, they were cautious as shares were up almost 14% after last week’s breakout.
While a breakout is attractive for bulls for obvious reasons, a big-time rally to new annual highs ahead of earnings can be risky business. Just look at the pre-earnings breakout we saw in FedEx (FDX) - Get Report earlier this week, before shares were hammered 10%.
The question now is whether Micron can rally to new multi-year highs? Let’s look.
Trading Micron Stock
Coming into the print, we did a trade preview for Micron stock. In it, we used both a daily and a weekly chart to map out potential upside and downside levels for investors. On a rally, we said, “let’s see if shares can rally to $57. Above puts $60+ on the table.”
Again taking a look at the weekly chart, investors can see the continuation from last week’s big-time breakout. Since Micron shares cleared $50, it’s been off to the races. On a pullback, we were looking for a possible dip down to this area that held as support. That would confirm that bulls were still in control, despite a post-earnings correction.
If Micron stock corrects down to this level in the future, bulls will need to see it hold as support.
On the upside, let’s see if Micron can climb to the $57 to $57.50 area. More importantly though, let’s see how the stock reacts if and when it gets there. This level played a key role through 2018, and is the gateway to $60+ should Micron want to continue higher.
Above $60 and $62 is on deck. This is a level that Micron hit multiple times throughout 2018, but it failed to close above this mark on every one of those occasions. Over $62 and the 2018 high of $64.66 is on the table.
That’s a long ways from here - about 20% above current levels - but if Micron is able to eclipse this mark in 2020, it will be the stock’s highest level in roughly two decades.
The bottom line: See that Micron is first able to hold its post-earnings gains. On a pullback below this week’s low (at $52.37), the $50 breakout level is on the table. Should shares continue higher, look for a move above $57 to get to $60. Above $60 and $62+ is possible.