Micron (MU) - Get Report began Thursday's session with a huge earnings-inspired breakout gap. The stock has remained extremely well bid since the opening bell and is stabilizing late in the day with a 13% gain. This impressive ramp-up -- Micron's best upside trade in more than a year -- is by far the best performance in the S&P 500 on Thursday.
In the near term, Micron's post-earnings surge may have a difficult time maintaining this momentum. A very heavy resistance zone, which is marked by a huge earnings-inspired breakdown gap back in June of last year, is about to come into play.
Considering the extent of Micron's post-election move, which is now stretched to more than 35%, a pullback from this area may be needed before the current rally phase can continue.
As December began, Micron was continuing to fade after a 10-day post-election winning streak. The stock fell back to a very solid support zone during this shallow pullback phase. After a couple of days of churn, shares were entering a new rally phase. The stock made a new high near $21 during the rally, a level that should now be considered a key support zone.
A pullback all the way down to this area may be too much to ask, but a healthy consolidation pattern appears likely before $24 is cleared. Adding to Micron longs before this plays out may prove to be frustrating.
This article is commentary by an independent contributor. At the time of publication, the author was long MU.