The S&P 500 may be hitting a new all-time high, but that’s not giving much comfort to Micron (MU) – Get Report investors.
Shares have fallen 5.5% on Thursday after the company beat earnings and revenue expectations.
That’s also despite providing better-than-expected guidance for next quarter.
Typically when a company beats on both lines and provides solid guidance, we get a post-earnings rally – not a decline.
The decline is taking out the premarket lows on the day as investors clearly don’t like the report.
Perhaps making matters worse is the stock’s struggle with multiple key moving averages. We shouldn’t see these levels breaking on a solid report. They should be holding as support, which is what one Real Money contributor is hoping to see too.
Let’s look at the charts.
The daily chart is a bit sloppy, so let’s zoom out and use the weekly chart. In this scenario, one can see that Micron stock has been trending lower and is trapped between its 10-week and 10-month moving averages.
Shares tried to rotate over the 10-week moving average, but stalled at the June high near $85 and the stock was ultimately rejected. Amid the dip, Micron failed to hold the 10-week moving average.
As it struggles to hold some of its shorter time frame moving averages (like its 10-day, 21-day and 50-day moving averages), investors are wondering what to do next.
Back over $82 could put the bulls in control. That puts Micron stock back over the 10-week moving average, as well as many of the short-term moving averages mentioned above.
Above $82.25 puts Micron above Thursday’s high and into the gap, opening the door up to roughly $83.50.
Ideally though, the stock could garner enough momentum to retest the June high and the 21-week moving average. Above that puts $90 in play, followed by clear resistance near $95 to $96.
On the downside, a break of $80 opens up support at $76.50 and from the 10-month moving average.
When it comes to trading this setup, we either want further weakness to buy a larger dip with a better risk/reward or we want to see some strength via a rotation higher and a move over certain key levels.