Here’s your trade on Micron ($MU) (September 26, 2019)
CMU
I want to look at Micron ( NASDAQ: MU ) today, here’s why: The company reported earnings just a little bit ago, just a few minutes ago. The earnings were actually pretty good. They reported Q4 and their earnings per share were $0.56 verses an estimate of $0.43. That’s about a 25 percent beat if looking at $0.43 as the estimate. On revenues, it was almost 4.9 billion and their estimate was 4.1.
So the bottom line is, they beat earnings estimates pretty good, yet you see that the stock is down. We’ll look and see where it’s trading after hours here, right around 45.75, we’ll call it $46.00. So as I look at this stock right now I am thinking about a trade for tomorrow; $46.00 is right about where the 50-day moving average is and the stock has rebounded off of the 50 before, zigzag pattern here.
Certainly traders were anticipating good earnings otherwise they wouldn’t have bought the stock up from 35.00 up to 50.00. So it just makes sense that we would get a little pullback here over the last couple of weeks just as traders took profits prior to earnings and now they are probably pretty happy that they did.
So here’s your trade tomorrow: First of all, if you are long the stock I think it would be a big mistake to sell right at the open. Now, if the stock opens up and it continues to fall then it would probably be a big mistake to hang on. But what we are really looking for here is for the stock to rally back above the 50-day moving average, revealing that there are buyers who are taking advantage of this sell-off, this post-earnings profit-taking, to get a better position in the stock.
My suggestion would be this: If the stock opens up below $46.00 stay away from it. Wait for the stock to rally back above $46.00. If it does then go ahead and take a small position in the stock and you can keep your stop, literally give it like a $.050 stop, maybe not even that. You can keep a real tight stop on a stock that you are buying when it has fallen and maybe even opened BELOW a key level of support but then runs back ABOVE that level of support before you buy. So remember the sequence, opens or trades BELOW the 50-day moving average, rallies back UP ABOVE the 50-day moving average, BUY. Set your stop below the morning print, there’s your trade.
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