Most of you know that I have been a big promoter of information technology for years now. Pretty much ever since the banks stopped working on a higher level for me, forcing not only myself, but much of the marketplace to search for leadership. That leadership had come in the form of the semi-conductor space.
I wear quite a few names here. I have long loved Action Alerts Plus holding Nvidia (NVDA - Get Report) for their innovation. I mean, who doesn't? I have long loved Intel (INTC - Get Report) , not only for their leadership, but for the firm's dividend. I have been in and out of Advanced Micro Devices (AMD - Get Report) as my appetite for blockchain exposure has evolved, and I have exposed myself to NXP (NXPI - Get Report) , as that firm's obvious undervaluation was made clear to the marketplace. I have also maintained longs in the wafer crowd, those who provide for the industry, such as (KLAC - Get Report) , (AMAT - Get Report) , and (LRCX - Get Report) .
One name that I have never owned a share of, nor a derivative position in, has been Micron Technology (MU - Get Report) . Why? No reason, really. Just can't be involved in everything. For that reason, and because the stock's recent range makes it interesting...let's take a look. The stock ran 3% yesterday on news that the firm had made available three new second generation 3D NAND storage products that are intended to support the Universal Flash Storage standard. In plain English, that means they've come up with new technology to help cell phones move forward with such developing technologies as artificial intelligence, virtual reality, and facial recognition.
How interesting, and possibly compelling is this chart? Your short-term indicators, such as Relative Strength, the daily MACD, and Money Flow have all turning positive. The entire group has been red hot, so you might take that with a grain of salt. So, let's move on to trend modeling.
Take look at the Fib levels (blue). Beginning with the August lows, and running through the late November highs, this stock found both significant support at the 38.2% retracement level as well as ultimate support during the flash correction just below a 50% retracement. I find this incredibly positive. I also find this highly indicative of a stock being priced by algorithmic traders, which in theory makes the stock much more predictable, and activity by sentient beings less detectable.
Though the stock is nearing the $50 level that has presented as resistance in the past, the Pitchfork model allows for rising resistance that could provide a pricing range of 48 to 60 by April. Promises? Not here. Educated opinion? Yeah, we can do that.
Target Price: 58
Panic Point: 43.50, trailing to 48 once 50 support is established.
(Option)al: As of last night you could still get 60 cents for 47.50 puts expiring this Friday.
(A longer version of this column appeared at 8:05 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Stephen Guilfoyle, Jim Cramer and other experts each trading day.)