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Micron Earnings Preview - Trading the Stock on Higher or Lower Moves

Micron is set to report earnings as the stock teeters in the middle of the recent range. Here's the setup now.

The markets remain volatile as investors continue feeling for the bottom of the recent decline. Amid that decline comes a couple of earnings reports.

Nike  (NKE) - Get Report reported on Tuesday evening, while Micron  (MU) - Get Report will post earnings Wednesday after the close of trading. These are some noteworthy players in their respective industries, and many tech investors will be glued to Micron’s quarter as a result.

It will be interesting to see what Micron has to say about the current memory environment as it pertains to demand in smartphones and other devices. Clearly the investment community expects a sharp decrease in demand, but is Micron seeing any signs of recovery as China gets back on its feet? If so, is the rebound sharp or tepid?

Investors will be looking for clues from management to get a sense of what type of disruptions the coronavirus outbreak has caused. That of course goes for Micron stock - which has been hammered, down 49% from February’s peak to March’s trough - but also for a read on tech in general.

Let’s look at the charts now.

Trading Micron Stock

Weekly chart of Micron stock. 

Weekly chart of Micron stock. 

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Micron stock took a dive down to $32.50, a significant level over the past few years. Despite a brief break below this mark, the stock found its footing and rebounded hard, ending north of $35 last week.

This week, it’s already reclaimed the 200-week moving average, but it’s struggling with the $45 area. That’s where it’s running into a prior breakout level from 2019, as well as the 50-week and 100-week moving averages.

Traders will need to wait for Micron to report earnings before taking a position. Doing so ahead of time is really just a gamble on the post-earnings reaction, particularly in this environment.

On a move higher, see if Micron stock can clear the $46 level. Closing above that puts bulls back in control, with shares over several significant metrics. It also puts $50 on the table, which is the underside of prior channel support.

On a move lower, let’s see if the 200-week moving average can step in as support. If it does, we have a higher low on our hands, which is a constructive development, although still doesn’t give investors the all-clear.

Below the 200-week moving average and the $32.50 level is back on the table. A break below this mark could trigger a retest of the recent low and put the 2018 low on the table just below $30.

Let’s wait to see how Micron trades after earnings and go from there.