A Look At Micron Technology From Different Time Frames, Different Perspectives

Micron Technology, Inc. MU reported
after the market close Tuesday its fiscal year fourth-quarter results, which showed a profit of $2.02 per share on a non-GAAP basis compared to a loss of 1 cent per share last year. Revenues nearly doubled to $6.14 billion.

Micron's first-quarter guidance was above the consensus expectations. The company also raised its capital spending forecast.

In reaction to the results and the outlook, Micron shares surged up 8.5 percent on Wednesday before settling at $37.09, which marked the highest level since March 8, 2002. The stock has augmented its gains Thursday and was up 1.43 percent at $37.52 at time of writing.

The sell-side went into a frenzy, raising price targets for the shares of the company.

From a closing high of $36.07 last Friday, the stock pulled back by 5.23 percent over two sessions to $34.18 ahead of the results. With the Street getting it wrong on the results, the market doubled up on its reaction, sending the stock sharply higher, as the memory chipmaker surprised to the upside.

The move is significant, as the stock took out nearly a 3-year high of $36.59 from December 2014, from where it tumbled to a low of $9.31 in January 2016. This marked a pullback of about 75 percent in a little over one-year timeframe.

See also: Lam Research On The Cusp Of Healthy Chip Industry Environment; Argus Initiates At Buy

The current uptrend, which has seen the stock shoot to a 15-1/2 year high from an August 11 low of $26.85, looks overstretched. From the low to the intra-day high of $37.62 on Thursday, the stock has advanced about 40 percent.

Source: Y Charts

With the stock advancing unhindered, owing to a lack of resistance, it may have a free passage until it meets with a pair of monthly highs from February 2002, which is at 39.45, and March 2002, which is at $39.50.

Investors may do well to watch out for the closing level to see whether the momentum seen in Micron shares is weakening. On further gains, the stock could face a major roadblock around its 2002 highs.

On the downside, the $31-$32 area could offer support, as the stock recently formed a triple top around this area. Additionally, the stock's 50-day SMA is currently at $31.50, strongly supporting it.

Joel Elconin contributed to this article

Related Link: Wall Street Analysts Ride The Micron Earnings Train
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