Chipmaker Micron Technology (MU) was not spared from the tech sector rotation. The shares hit a record high of $157.53 on June 18, but have since taken a 30% haircut. If past is precedent though, this could be the time to take a flier on MU, considering the chip stock has pulled back to a historically bullish trendline.
Micron is within one standard deviation of its 200-day moving average, per Schaeffer’s Senior Quantitative Analyst Rocky White. For the purpose of this study, White defines that as the equity trading above the moving average for 80% of the time over the past two months, and closing north of the trendline in eight of the last 10 sessions. The equity has run into this trendline three times in the last three years, and was higher one of month later all three times, averaging a 12.2% return. From MU’s current perch of $110, a move higher of similar magnitude would have the equity testing a pre-bear gap levels from July 16.
Despite the stock’s recent struggles, MU is still a big winner in a prolific sector, up 29% year-to-date and 55.5% in the last 12 months. It’s also worth mentioning that the selloff has sent Micron deep into “oversold” territory, per its 14-day relative strength index (RSI) of 12, so a short-term bounce could be in the cards.
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