Micron (MU) Trading Higher After Beating Estimates

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Micron (MU) Trading Higher After Beating Estimates

Micron Technology, Inc. (MU) is up around 4% in pre-market trading on Friday after exceeding first-quarter 2021 top- and bottom-line projections and upping second-quarter earnings per share (EPS) guidance. The memory chip company earned $0.78 per share, $0.09 more than expected, while sales increased 12.2% to $5.77 billion, topping $5.66 billion projections. The business now anticipates that second-quarter earnings per share will be around 10% higher than the prior estimate.

Key Takeaways

  • Micron gained ground overnight after exceeding first-quarter earnings and sales projections.
  • DRAM prices are firming up and are predicted to remain high until 2023.
  • In 2020, the stock returned 39%.
  • Bullish movement at $80 would support a quick ascent to the all-time high above $100.

DRAM (dynamic random access memory) chip prices are likely to firm up in 2021, as supply and demand rebalance. This is supporting the stock while persuading analysts to improve their recommendations and price targets. The stock is presently trading only 15 points below the high of the Internet boom in 2000, at $97.50, closing in on a resistance level that the bulk of the big tech giants set years ago.

The Wall Street consensus on Micron stock is the most positive in years, with a “Strong Buy” rating based on 20 “Buy” recommendations and one “Hold.” Despite Micron’s 39% 2020 return, no experts propose that stockholders sell their shares. Price estimates presently vary from $60 to $105, with the stock expected to start around $6 below the consensus $88 price on Friday. With the lopsided structure, a swift progress through 21-year-old resistance is feasible.

  The Casino Mentality In Trading

A bubble is an economic cycle marked by fast increases in market value, especially in asset prices. This rapid inflation is followed by a rapid decline in value, sometimes known as a “crash” or “bubble bust.”

Micron Long-Term Chart (2000–2021)

TradingView.com

A multi-year upswing peaked at $97.50 in 2000 before collapsing into a sharp drop that finished in the single digits in 2003. During the mid-decade bull market, the stock scarcely moved, laying the groundwork for a secondary decline that concluded with a 16-year low around $2.00 in 2008. That marked the end of an eight-year slump, paving the way for a two-leg rally that peaked in the mid-$30s in 2014.

Consistent selling pressure through January 2016 struck 2013 support in the lower teens, drawing substantial buying activity that supported a sustained increase towards the preceding high in 2017. The stock soon took off, rising to the low $60s in the first quarter of 2018. At the time, the trade war interrupted the uptrend, resulting in a rounded correction with higher lows in December 2018 and March 2020.

In November, the post-pandemic advance reached the February 2020 top, triggering a fast purchasing rush that also completed a round trip into the 2018 peak. The stock popped up in early December, rising around 10 points before settling into a lateral consolidation that lasted through the first week of 2021. Committed buyers arrived earlier this week, causing another surge before of today’s bullish confessions.

Although the monthly stochastic oscillator has hit its most severe overbought level since 1993, the December range has formed a trading floor around the mid-$70s, limiting the extent and severity of prospective pullbacks. Furthermore, the overnight rebound has broken beyond the.786 selloff retracement barrier. This is the last harmonic barrier before the circular journey into the towering 2000 summit. As a consequence, price movement around $80 might set the tone for the rest of the first quarter.

  Support and Resistance Reversals

When a security is overbought, it is thought to be trading at a price that is higher than its inherent or fair worth. Overbought often refers to recent or short-term price movement in a security and implies a market anticipation that the price will correct in the near future.

The Bottom Line

Micron is trading at a 20-year high after exceeding earnings and sales expectations in the first quarter.

Disclosure: At the time of publishing, the author had no investments in the aforementioned securities.

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