Ignore the MU stock daily chart and buy the big picture
For some investors, Micron Technology, Inc. (NASDAQ:MU) has been climbing a wall of worry the last few weeks. For others though, the big picture of MU stock is simply looking increasingly bullish off and on the price chart.
A month ago, MU stock couldn’t get out of its own way. Shares were garnering the attention of bearish technicians backed by equally flimsy speculations. A dismal late-July report from Seagate Technology PLC (NASDAQ:STX) and worry Micron’s key DRAM market was quietly working its way into an undesirable supply glut were the loudest alarms being sounded. “Booyah!”
“Poof!” Gone or at least massively suppressed are narratives of doom and gloom for MU stock. In fact, shares have been handsomely outperforming the broader market and recouping virtually all the ground lost over the last four weeks.
No doubt the passage of time has helped some investors appreciate MU’s weak correlation with Seagate. Other investors may have woken up to a much more closely aligned and very bullish report from SK Hynix which got swept under the carpet in the aftermath of Seagate’s warning.
At the end of the day, it’s often difficult to know what’s responsible for quick-to-change investor sentiment in MU stock, other than appreciating the neuroses of the market for what they are.
Having said that, sometimes it is obvious.
Shares of MU were up again on Tuesday and outperforming the market as bulls attached themselves to an upbeat analyst note from Credit Suisse. Following an industry conference this past week chip analyst John Pitzer offered up the view Micron’s past troubles with memory market commoditization may be weakening.
In a nutshell, the demands of artificial intelligence and machine learning within cloud computing require “high-bandwidth memory” or HBM. As this type memory is critical to the success of this increasingly important market, price pressures for these type chips should see less violent cyclical behavior. That stands to benefit Micron.
And if we’re to believe MU stock, that bullish trend could be making itself known on the price chart as well.
Micron Stock Weekly Chart
In early August as MU stock was getting pummeled, displaying extreme relative weakness and causing at least one analyst to tone down their prior enthusiasm, I thought it would be wise to step back and look at the big picture.
Fast forward about four trading weeks and the prior mayhem of MU’s daily chart, which I suggested to ignore, looks even less of a concern on the weekly view. What had been described as a constructive counter-trend consolidation within a 15-month uptrend when shares were at $28.34, now has (some) investors breathing easier.
Article printed from InvestorPlace Media, http://investorplace.com/2017/08/micron-technology-inc-mu-stock-buy-buy/.
©2017 InvestorPlace Media, LLC