Micron Stock Is Supported by the Following Indications
MU Stock: This Bull Is Strong
Micron Technology, Inc. (NASDAQ:MU) stock and I have become good friends since I stumbled upon this name in July of last year. I was quick to point out in a publication titled “Micron Technology, Inc.: Has Micron Stock Finally Bottomed?” that there were indications on the MU stock chart that were suggesting a bottom in the price had been formed. These indications didn’t disappoint as Micron shares have gone on to much higher prices. These indications continue to support an advance and are highlighted below.
A quick note to any of new readers. My investment views on Micron shares were generated by analyzing the companies price chart. This method of investment analysis is known as Technical Analysis. I have spent the last 2 decades specializing in this method of analysis because I have found that it offers great value when I apply it an investment strategy.
Since bottoming in May 2016, MU stock has been trending higher. The trend towards higher prices can easily be defined using a simple uptrend line. This trend line is easily created by connecting the troughs on the price chart.
The following Micron stock chart illustrates the indications that have supported this advance.
Chart courtesy of StockCharts.com
This uptrend line serves many functions; not only does it define the direction of the predominant trend, but it can also be used to define risk. As long as Micron stock is trading above this trend line, I can only assume that higher prices will prevail. Trading below it would suggest that the bullish advance has concluded and that a larger correction is set to take hold.
The bullish advance that has been defined by the uptrend line has been supported by the moving average convergence/divergence (MACD) indicator. The MACD indicator located in the lower panel is a simple trend-following momentum indicator. This indicator uses Signal-line crossings to generate a signal. A signal that is used to distinguish whether bullish or bearish momentum is influencing the performance of the stock. This indicator has an impeccable track record of confirming the direction of the predominant trend.
In September 2016, a bullish cross was generated. This signal served to suggest that bullish momentum is influencing Micron stock. This results in a dynamic where the path of least resistance is geared towards higher prices. This indicator has effectively confirmed that the predominant trend is to the upside.
As long as the MACD indicator is in bullish alignment and Micron shares are trading above the uptrend line, I can only assume that the bull market advance is still intact, and therefore higher prices are likely.
This bullish view is further reinforced by the following Micron stock chart.
Chart courtesy of StockCharts.com
This Micron price chart is using a daily scale. This price chart illustrates numerous indications that are also supporting this advance.
The ascending channel is very similar to the uptrend line, except it contains a parallel upward-sloping trend line that represents resistance. This creates a channel in which price oscillates. The price action within the channel carries the quintessential characteristic of a bullish trend, which is a series of higher highs and higher lows. As long as Micron stock is within the confines of this channel, I can once again only assume that higher prices will likely prevail.
This bullish trend towards higher prices has been supported by a golden cross. A golden cross is a bullish indicator that is produced when the faster 50-day simple moving average, highlighted in blue, crosses above the slower 200-day simple moving average, highlighted in red. This indicator is popular among trading community because it serves to suggest that a bull market is in development.
MU stock is trading above both moving averages that generated the golden cross, and the 50-day moving average has now become a level of price support. Any time this level is tested, buyers are quick to step in and push Micron shares back above this moving average. This is a testament to the inherent strength that is propelling this investment.
The following Micron stock chart illustrates the most recent developments that are implying a further advance.
Chart courtesy of StockCharts.com
The Micron price chart illustrates constructive price action that consists of an alternating two-wave structure. The first wave is an impulse wave, highlighted in green, and the second wave is a consolidation wave, highlighted in purple.
The function of a bullish impulse wave is to advance price, while the function of the consolidation wave is to alleviate any overbought conditions that have been created, and more importantly, set up the next impulse wave. This alternating wave structure creates the necessary pieces to build a sustainable trend.
Micron stock has just exited a consolidation wave in an upward direction suggesting that a new advancing impulse wave is set to develop. This bullish event is occurring as the MACD is about to generate a bullish cross. This confluence of indicators is suggesting that another advance is set to take hold.
Bottom Line on Micron Stock
I am bullish on Micron stock because the indications on the price chart continue to suggest that this view is warranted. I will remain bullish on MU stock until there are indications on the price chart that suggest another view is warranted.
