Buy or Sell Micron? Here's What the Charts Say

Micron is rallying on earnings but hasn't broken out over resistance. Let's look at the chart to see the key levels from here.
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Micron  (MU) - Get Report stock was rallying on Thursday, the last trading day of the week, up about 5% after better-than-expected earnings.

While the stock was gaining, it was having trouble garnering enough momentum to push it to new 52-week highs.

So far, the $95 to $96 area continues to act as resistance as Micron faded from this level twice in the last two months.

Bulls are hoping that a top- and bottom-line beat is enough to get the stock pushing to new highs.

It helps that there have been numerous price target upgrades following the results as well. The question now is whether it will be enough to send Micron to new highs or send it retreating.

Let’s look at the chart.

Trading Micron

Daily chart of Micron stock.

Daily chart of Micron stock.

Shares are gapping out of a strong support area, clearing the two-times range extension but fading from that $95 to $96 area I referenced earlier. The stock’s uncertain reaction to this area is also on the radar of this Real Money contributor.

On the plus side, we have a pretty simple roadmap from here. 

Either Micron needs to push higher into this possible resistance area or it could fade even lower. If it fades lower, keep an eye on $91.25. A move below that could trigger a gap-fill down toward $89.

It may also put the 10-day and 21-day moving averages on the table.

As much as we don’t want to see a stock give up its post-earnings gains, a deeper pullback may be attractive in Micron stock. Specifically, a dip toward the $86 to $87 area puts a plethora of potential support measures in play and offers bulls a reasonable buy-the-dip opportunity.

On the flip side, if the stock can take out the current resistance level and close above this zone, it puts $100 in play. A close above $100 opens the door to the 261.8% extension up near $110.

However, without either of these scenarios playing out, Micron is stuck in no man’s land. We need something that gives us a more definitive risk/reward. Until we get it, investors should be patient.

In short, look for a dip into support or a breakout over resistance.