Very much like the stock of Alcatel-Lucent (), which I discussed here yesterday, Micron Technology (
) has been trading in the shadows of its heydays for more than a decade.
For a little perspective, see the below chart looking all the way back to 1999:
What once was a high-flying stock trading close to the $100 mark has been confined to a trading range between roughly $2 and $18 since late 2002.
However, the above chart — while nice to see — doesn’t help us a great deal in the more near- and medium-term technical analysis of Micron stock. Thus, I zoomed into a chart looking back to 2002 to draw some more meaningful lines of support and resistance.
The first obvious line of resistance is near the $18 mark, which is roughly $3 (or 20%) above MU’s current price.
Next, note that in March of this year, Micron busted past a multiyear diagonal resistance area, after which it consolidated just north of said resistance line, which ultimately led to a tireless rally into yesterday’s highs.
The steep rally in Micron stock so far tallies up to 140% year-to-date, which Wednesday trading further topped off on massive volume of almost 118 million shares. Wednesday’s 5.3% rally came on the back of positive comments about the company from Sterne Agee’s Vijay Rakesh. Semiconductors as a group — and as measured by the ÃÛÌÒ´«Ã½ Vectors Semiconductor ETF () — also had a great day yesterday, which further speaks to possible sustainability in the rally by Micron.
While Wednesday’s rally didn’t close MU at a new year-to-date high, Micron did manage to gap out of a multiweek consolidation phase on huge volume, which from a pure technical perspective is not something I can assign much bearishness to.
From a medium-term point of view, Micron stock has important support near the $13.50 area. If it can keep up its momentum, MU might just be able to move toward the $16 area in the not-too-distant future.
Serge Berger is the head trader and investment strategist for . Sign up for his . As of this writing, he did not hold a position in any of the aforementioned securities.
