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How to Trade Micron With Earnings on Deck

Micron will report earnings later this week as shares of the chipmaker continue a push to 52-week highs. Let's look at the chart now.

Micron  (MU) - Get Micron Technology Inc. Report was up 4.1% on Tuesday, although it’s no surprise if bulls feel disappointed.

How can investors be disappointed with a one-day 4% bump?

For starters, it’s off the session high of $78.69 - which is also a fresh 52-week high - when it was up almost 6.5% on the day. Additionally, investors may still be a bit salty about Monday’s action.

That’s when Micron stock rallied as much as 4.5% in early trading before ending lower by 1.5% at the close. That disappointing action wasn’t just reserved for Micron though, with Advanced Micro Devices  (AMD) - Get Advanced Micro Devices Inc. Report, Nvidia  (NVDA) - Get NVIDIA Corporation Report and other peers trading in a similar manner.

However, analysts came out in strong support of Micron on Tuesday, with multiple upgrades and price-target hikes.

The bulls are out ahead of the company’s earnings, scheduled for       after the close of trading on Thursday.

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Trading Micron Stock

Daily chart of Micron stock.

Daily chart of Micron stock.

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Micron has actually been trading very well lately, despite the back-to-back fades we’ve seen this week.

In early November, the stock broke out over $55. Then it quickly cleared the pre-coronavirus 2020 high at $61.19 and the 2018 high at $64.66.

More recently, shares were trading between $69.50 and $74.50. While Micron has struggled to hold above the upper end of that range, it is doing that now ahead of earnings.

If we see more pre-earnings momentum, let’s see if it can clear the current two-day high at $78.69. Above that will put the 161.8% extension in play at $79.77.

It wouldn’t likely be in a straight line, but above $80 and the two-times range extension at $91.25 could be on the table. Keep in mind, Micron’s all-time high — from 2000 — is up at $97.50.

If the post-earnings reaction is bearish, it might be too tight of a range to expect Micron to hold $74.50 as support. If it does though, I would view it as a bullish dip.

Below $74.50 will put the $71.50 to $73 area in play, where Micron finds the 10-day and 21-day moving averages and VWAP support.

If that area fails as support, it will put range support back in play near $69.50, as well as the 10-week moving average.