Profit from the AI wave now: One stock with lots of upside potential | Don’t ignore this chart!
key
gist
- Improved earnings and strong guidance were enough to boost Micron Technology’s stock price.
- Micron Technology has hit a new 52-week high and the stock has room for further upside.
- To trade this stock, identify your entry and exit price targets.
Yesterday’s stock market plunge was enough to make investors anxious. When Micron Technology (MU) stock fell more than 4% before the company announced earnings, many expected poor performance. But Micron beat revenue and earnings expectations, and the stock opened about 8% higher. This erased yesterday’s losses.
Micron’s stock price hit a 52-week high, but continued to decline thereafter. The stock has become the most active stock in the S&P 500. This stock in particular is worth a closer look because it belongs to the Semiconductor sub-sector and trades around $85, making it more accessible than other stocks in the same sub-sector.
Micron Technology’s Weekly Outlook
Let’s start by looking at Micron Technology’s weekly chart (see chart below).
Chart 1: Weekly chart of Micron Technology stock. The stock is above the upper Bollinger Band, the SCTR score is high, and the RSI is moving out of overbought territory. This indicates that the stock has upside potential.Chart source: StockChartsACP. For educational purposes.
MU is above the upper Bollinger Band®, the StockCharts Technical Rank (SCTR) score is above 90, and the Relative Strength Index (RSI) is just below overbought territory. All three indicators show that this stock has the potential to move higher even in an overextended market.
A glimpse into Micron Technology
Let’s move to the MU daily chart (below).
Chart 2: Daily chart of Micron Technology stock. The stock is trading on high volume, the RSI is inching toward overbought territory, and the stock is underperforming the semiconductor industry. If momentum continues, this stock could go much higher.Chart source: StockChartsACP. For educational purposes.
Daily charts show similar indicators as weekly charts. The stock has hit a 52-week high and is trading above the upper Bollinger Band, volume is above average, RSI is below overbought territory, and MU is underperforming the VanEck Vector Semiconductor ETF (unadjusted data) but is trending upward.
conclusion
When a stock moves above the upper Bollinger Band, it indicates strength. If you enter the trade now, you will continue to trade as long as the price walks through the upper band. The 20-day simple moving average (red dotted line) could be the first support level. You may want to wait for the next downtrend before entering a trade.
Fundamentally, the stock looks positive between now and the next earnings report. Guidance in Micron’s earnings report released after the market closed Wednesday was strong, largely because demand for memory chips is likely to increase as AI becomes mainstream. So if you’ve missed the boat on some of the Magnificent Seven stocks, MU may present an opportunity to jump on board the AI rally. This stock has room to run.
disclaimer: This blog is written for educational purposes only and should not be construed as financial advice. You should not use any of our ideas and strategies without first evaluating your personal and financial situation or consulting a financial professional.
Jayanthi Gopalakrishnan is the Director of Site Content at StockCharts.com. She spends her time creating content strategies, providing content to educate traders and investors, and finding ways to make technical analysis fun. Jayanthi was the Editor-in-Chief of T3 Custom, a content marketing agency for financial brands. Prior to that, she served as Technical Analysis Editor for Stocks & Commodities magazine for over 15 years. Learn more
