Micron Stock Shows Signs of Recovery from Technical Downtrend



Micron’s stock price movement

Memory stock prices recorded significant movement near the beginning of the year. Stocks of memory chipmakers Micron Technology (MU) and Western Digital (WDC) bottomed out a day before Christmas of 2018 to their new 52-week lows of $31.09 and $36.39, respectively, as investors reacted to the concerns of a cyclical downturn in the memory industry.

The next blow came on January 3, 2019, when Apple (AAPL) lowered its revenue guidance for the December 2018 quarter, pulling down the stocks of all its suppliers including Micron and Western Digital.

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January 2019

After six straight months in a downtrend, memory stocks rallied last week with Micron rising 10% and WDC rising 7.7%. The stocks rose as some Wall Street analysts upgraded Micron, stating that the memory uptrend is likely to come in the second half of 2019.

This stock rally was short-lived as Micron’s and WDC’s stock fell 5.6% and 5.9% in the first two days of this week as Evercore ISI analyst downgraded WDC and raised concerns about the sustainability of its dividend. Even though the downgrade was specific to WDC, Micron had to bear the brunt of the impact. Micron’s announcement that it would acquire Intel’s (INTC) stake in IMFT’s (Intel Micron Flash Technologies) joint venture didn’t have a positive impact on the former’s stock.

Technical analysis

Micron and WDC have been stuck in a technical downtrend for the last six months, falling 40% and 50%, respectively, from their 52-week highs. Their short-term moving averages (or MA) are lower than their long-term MAs, indicating that they are still in a downtrend. Moving averages take the average of a stock’s prices during a certain period to understand which direction the movement is trending.

Micron’s current trading price is above its 20-day MA. Its rally last week saw the stock rise above its 50-day MA, indicating that the stock is showing signs of recovery. It is showing resistance at $32, which is close to its 20-day MA of $32.8. If the stock rises above $35, it will move above its 50-day MA and be on a recovery path. But if the stock falls below $32, it would head for another steep decline.

In this series, we’ll look at Micron’s stock and understand if it is a good time to invest in this stock.

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