Micron Technology, Inc. shares more than doubled in price last year, but recent technical weakness could signal an intermediate correction that traps the momentum crowd. That decline will face a major reality check in the mid-$30s, with a breakdown opening the door to much steeper downside. Given potential headwinds, it makes sense for shareholders to review positions, tighten stops and take other measures to protect hard-earned profits.
The uptrend has not tested the rising 200-day exponential moving average (EMA) since August 2016, highlighting one-sided price action that may now have run its course. In addition, the PHLX Semiconductor Index (SOX) finally reached resistance at the 2000 bubble high in November 2017, signaling a potential climax that could end the sector’s dramatic uptrend. Micron stalled at the same time due to correlation that may have greater power over 2018 price action than technicals or fundamentals. (See also: SOX Semiconductor Index at 17-Year Resistance.)
The memory chip giant has a long history of grinding through massive boom-bust cycles that wipe out several years of profits in relatively short time frames. For example, the 13-month decline that began in December 2014 posted losses in excess of 35 points while retracing more than 80% of the 2012 into 2014 uptrend. A similar pullback from the current uptrend would yield a decline into the mid-teens.
Technical signals are waving red flags, raising odds for a decline that could eventually end the long-term uptrend in Micron shares. …read more
Read more here: Micron Stock Could Enter Intermediate Correction