Micron Stock Has Room to Run

MU stockMU Stock: In Bullish Alignment

There is absolutely nothing bad I can say about Micron Technology, Inc. (NASDAQ:MU) stock. This investment continues to power higher and MU stock is currently up 48.27% year-to-date. What makes this performance number even more exceptional is that there are no signs of this rally abating any time soon because Micron stock continues to forge new highs. This torrid run towards higher prices has been supported by a number of technical indicators that remain in bullish alignment, supporting further gains.

I have been bullish on Micron stock since I first wrote about it in July 2016 in a publication titled, “Micron Technology, Inc.: Has Micron Stock Finally Bottomed?” My bullish view on this investment was generated using a method of investment analysis known as technical analysis. This is just a fancy way of saying that I generated my bullish view on this investment by analyzing the price action and indications on the company’s stock chart.

The price chart below illustrates the predominant bullish trend that has served to support and contain the advance in MU stock. This type of price action is best captured using two parallel upward-sloping trend lines. These trend lines create an ascending channel. The lower trend line represents support, while the upper trend line represents resistance. Oscillating between support and resistance allows this trend to remain sustainable, and as long as MU shares remain inside this channel, this trend towards higher prices can continue indefinitely.

The following Micron stock chart illustrates the indications that have been, and currently are, supporting this advance.

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Micron stock chart

Chart courtesy of StockCharts.com

Support outlined by the ascending channel has been recently tested and a rally has since ensued. This rally is likely to test resistance outlined by the ascending channel before this bullish trend is ready for a slight pause.

The advancement in the share price has been supported by a golden cross that was originally generated in July 2016. A golden cross is a bullish indicator that is created when the faster 50-day moving average crosses above the slower 200-day moving average. This indicator is used to confirm that a bull market is in development. A bull market is characterized with an advancement of the stock price.

The 50-day and 200-day moving averages remain in bullish alignment, suggesting that this bull market is fully intact and that the advancement of the stock price is set to continue. This bullish alignment is made possible because Micron shares have been using the 50-day moving average as a level of price support. Every time this level has been tested, investors have been more than willing to jump in and support this investment at this moving average.

The following Micron stock chart provides further indications that are supporting this advance, as well as a significant level of overhead resistance.

MU stock price

Chart courtesy of StockCharts.com

The main focus on the MU stock chart above is the indicator located in the lower panel labeled “MACD,” which is an acronym for moving average convergence/divergence. The MACD indicator is used to distinguish between bullish and bearish momentum. These indications are highlighted on the price chart above.

In February 2015, a bearish cross was generated, indicating that bearish momentum had overcome Micron shares. This suggested that the path of least resistance for the stock price was geared towards lower prices. This bearish cross correctly confirmed that the bullish advance had concluded, and a correction was set to ensue.

In September 2016, a bullish cross was generated, indicating that bullish momentum had finally overcome the bearish momentum that gripped this investment. This indication created a bullish environment where the stock price was geared towards higher prices. The bullish MACD cross correctly confirmed that a new bullish advance had commenced.

The MACD indicator remains in bullish alignment and there are no signs of this indication abating any time soon because the histogram on the price chart continues to suggest that this trend towards higher prices is firmly intact. The green arrows illustrate that the histogram bars are still making highs, suggesting that this bullish trend is still gaining strength.

This bullish trend is well-supported and the level of overhead resistance highlighted above will likely be tested. This level overhead of resistance currently stands at $36.59 and marks the previous high set in 2014. This high was followed by a very large correction, which suggests that it is significant. If Micron stock can break above this level of resistance, it will open up the door to much higher prices, but at this juncture, I am only focusing on a test of this level.

Bottom Line on Micron Stock

The bullish trend in Micron stock is well-supported by bullish signals. These bullish signals remain in bullish alignment, and there is nothing to suggest that this trend towards higher MU stock prices is set to end any time soon.