MU Stock: Delightfully Bullish

Micron Technology, Inc. (NASDAQ:MU) reported earnings after the close of trading on December 21, 2016. To investors’ delights, it beat on the top and bottom lines. As a result, MU stock is trading up 9.91% in after-hours trading.

These great results are not a surprise, because I have been bullish on Micron stock since a bottom was formed earlier this year. In my previous report on Micron stock, I noted that new bullish signals were continuing to support a bullish advance and that the path of least resistance continues to be to the upside.

Micron stock has been known to experience a high level of volatility, as trends can persist for longer than most tolerate. These prolonged trends bode well for both bullish and bearish markets, so it always wise to pay attention to the predominant trend and signals in the MU stock chart.

The following Micron Stock chart illustrates the bottom that was formed earlier this year.




Chart courtesy of StockCharts.com

This bottoming pattern illustrated on the above MU stock chart began to develop in early 2016, after an initial low was created in early January. For the next six months, a trading range developed that constitutes the rectangle, or “double bottom” as some traders refer to it.

In May, Micron stock began to sell off once again, but the price was unable to break below the lows that were set in January, and the price quickly reversed in the opposite direction.

The rectangle bottom pattern was completed when the Micron stock price closed above the peaks that acted as a level of resistance. The completion of this pattern was an indication that a trend reversal was in play as the trend toward lower prices had finally come to end.

The following Micron stock chart illustrates the bullish trading action that followed.

Chart courtesy of StockCharts.com

Shortly after the bottom was formed, MU stock began to trade with a bullish bias, and a new bullish trend had developed. There are two parallel lines that define this trend. The pattern is known as an ascending channel. An ascending channel has two trend lines that define the upper and lower bounds. The share price will oscillate between these two trend lines for as long as time and the trend permit.

As long as MU stock is contained within this ascending channel, the bullish trend shall persist. In late July, a golden cross was generated that supported this bullish move. A golden cross is a bullish signal that is produced when a faster 50-day moving average crosses above a slower 200-day moving average. This signal indicated that the bulls had once again gained momentum and, as a result, the path of least resistance is higher.

The level of resistance outlined by the ascending channel is the next logical price objective after Micron stock tested the bottom trend line in early November. The top trend line of this ascending channel is not visible on this chart, but it currently stands at $26.00 and is rising as time progresses. The result of this is that, the longer it takes for MU stock to hit this trend line, the higher the price objective will become.

Bottom Line on MU Stock

Micron stock is expected to trade higher today on the back of an earnings report that beat both on the top and bottom lines. I have been bullish on Micron stock because the MU stock chart warranted having this view so, as long as the price chart remains bullish, so too will my view on this investment.