The Key Level Micron Bulls Must Defend As Stock Pulls Back On Q1 Miss

While a few good earnings reports took the markets higher Wednesday, a few bad earnings reports and some hot economic data were weighing on the markets in Thursday’s session.

One of the issues having a negative impact on the markets following its first-quarter earnings report is Micron Technology Inc MU which is the PreMarket Prep Stock of the Day.

Rough 6 Days For Micron: Similar to the S&P 500 index and many other issues, Micron reached an interim high last Tuesday when investors went wild over the most recent CPI data. In that session, Micron peaked at $57.89 and weakened to end the session at $55.24.

Market forces over the last week have weighed on the issue, as it traded as low as $50.45 on Tuesday and ended Thursday’s session at $51.18.

Micron's Flat-Out Q1 Miss: After the close on Wednesday, the company reported quarterly losses of 4 cents per share, which missed the analyst consensus estimate of a one-penny loss by 300%. This is a 101.85% decrease over earnings of $2.16 per share from the same period last year.

The company reported quarterly sales of $4.08 billion, which missed the analyst consensus estimate of $4.12 billion  by 0.85%. This is a 46.86% decrease over sales of $7.69 billion in the same period last year.

In an attempt to stop the bleeding, the company announced a restructuring plan in response to challenging industry conditions and said it expects to reduce its headcount by close to 10% In calendar year 2023. 

PreMarket Prep's Take: When the issue was being covered on the show Thursday, it was trading lower by $2 at the $49.20 area. Co-host Dennis Dick, who owns the issue from higher prices, lamented staying in the stock when he just missed his exit when Micron peaked at $64.44 on Nov. 15.

“Welcome to cyclical trading 101. When the issue was trading at five times earnings earlier in the year and at a much higher level, everyone said how cheap it was,” he said. “Now with the downturn in demand, the company is losing money and has no price/earnings ratio.”

The author of this article gave investors one very important level to follow in the upcoming session. That was the recent low for the move from November at $48.45.

It was critical for the Micron bulls to defend that low in order to ward off much lower prices.

MU Price Action: After a lower opening ($49.50 vs. $51.19) Thursday, Micron attempted to rally, but stalled just shy of $50 at $49.97 and resumed its move lower.

The stock was trading down 2.91% to $49.70 heading into the close Thursday. The next level of monthly support comes in at its October 2020 low of $46.50.

The discussion on the issue from Thursday’s show can be found here:

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