Micron Technology, Inc.: Bullish Tailwinds Persist for MU Stock

MU StockMU Stock: Bottoms Up!

Micron Technology, Inc. (NASDAQ:MU) stock is a wild ride of an investment. Micron stock has had its share of stellar performance where shares went up multi-fold, which was then followed up by a similar disastrous decline. MU stock has made it a habit of creating great wealth and then destroying it. For many, this would be reason enough to stay away. I tend to disagree, because an opportunity at the possible right time should never be completely dismissed.

The markets are currently under duress, as a shift in interest rates has caught many traders flat-footed. This may sound like bad news but, for those looking to acquire attractive securities on a pullback, this event presents an opportunity. I have reason to believe that Micron shares bottomed earlier this year, and I view any pullbacks as opportunities.

The following MU stock chart illustrates the signals that suggested a bottom was in place.


Chart courtesy of StockCharts.com

The following two signals suggested and confirmed that a tradeable bottom was in place in MU stock.

The first signal executed on August 10, 2016, when Micron stock confirmed a double bottom. A double bottom is a reversal pattern that appears at the end of trend. It is marked by two consecutive bottoms, separated by a peak in between. The pattern is confirmed when shares close above the peak that separates the two bottoms.

The second signal was produced in July 2016, when MU stock generated a golden cross. A golden cross is a bullish signal that is produced when a 50-day moving average, highlighted in blue, crosses above a 200-day moving average, highlighted in red. Traders use this signal to confirm that a bull market is on the horizon. I find it always wise to trade in the direction of this signal.

An uptrend developed in the MU stock chart after these signals were generated, as illustrated below.


Chart courtesy of StockCharts.com

The uptrend that has developed (highlighted in blue) is clear and defined. This line is created by connecting the troughs on a price chart. An uptrend is defined by higher highs and higher lows. This trend can be easily be identified as the price moves from the lower left to the upper right. This is a clear example of  a bullish trend. Micron stock will continue to trade with a bullish bias for as long as the trend remains intact.

The trend line not only defines the trend, but also acts as a level of support. Traders will be eyeing this trend line on any pullbacks.

The following MU stock chart, using a monthly scale, illustrates another bullish development currently in the making.


Chart courtesy of StockCharts.com

The focus on this chart of Micron stock is the moving average convergence divergence (MACD) in the bottom panel. MACD is a simple and effective trend-following momentum indicator. Signal line crossings are used to distinguish between bullish and bearish signals.

In January 2015, MU stock generated a “sell” signal when the monthly MACD signal crossed in a bearish manner. This signal effectively halted any sustained gains in the price, and shares of Micron stock proceeded to sell off. This same signal is now in the process of a bullish cross. This signal argues that the current run in MU stock has only just begun.

Last Words on Micron Stock

I like Micron stock because the indicators continue to line up in a bullish manner. The markets are entering a time of year that is known for considerable volatility. I will be watching the price action as MU stock approaches support. If support holds during this tenuous time, MU stock has the potential to finish off the year with a strong performance.