My first earnings short-squeeze play global semiconductor devices maker and marketer Micron Technology (MU), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Micron Technology to report revenue of $3.98 billion on earnings of 75 cents per share.
Recently, Stifel Nicolaus's Kevin Cassidy reiterated his buy rating on shares of Micron Technology and his $31-a-share price target.
The current short interest as a percentage of the float for Micron Technology is very high at 12.6%. That means that out of the 989.44 million shares in the tradable float, 124.68 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 9%, or by about 10.30 million shares. If the bears get caught pressing their bets into a bullish quarter, then shares of MU could easily soar sharply higher post-earnings as the shorts jump to cover some of their trades.
From a technical perspective, MU is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares moving lower from its high of $25.68 to its recent low of $21.70 a share. During that move, shares of MU have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of MU have now started to bounce off that $21.70 low and it's starting to move within range of triggering a near-term breakout trade.
If you're bullish on MU, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance levels at $25.15 a share to its 52-week high at $25.68 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 31.99 million shares. If that breakout hits, then MU will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35 a share.
I would simply avoid MU or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support levels at $21.70 to $20.64 a share high volume. If we get that move, then MU will set up to re-test or possibly take out its next major support levels at its 200-day moving average of $18.92 a share to around $16 a share.