During the Lightning Round of "Mad Money"
Thursday night, a caller asked Jim Cramer about Western Digital ( WDC
) . Cramer responded: "I'd rather buy Micron Technology Inc., ( MU
) which is less expensive."
Let's review the charts on MU.
In the daily bar chart of Micron below, we see a setup in which prices may be taking a pause.
MU is above the rising 50-day moving-average line, but it is looking extended above the rising 200-day moving-average line.
Trading volume has been shrinking from late June, and this is not the picture technical analysts like to see. The daily On-Balance-Volume (OBV) line makes a low in late June, but its rise does not look as strong as the price rise, which suggests that buyers of MU are not particularly aggressive.
The Moving Average Convergence Divergence (MACD) oscillator is crossing to the downside to a take-profits sell signal, and at a lower high than it made in July, also giving us a bearish divergence.
In the weekly bar chart below, the picture is more positive. Prices are above the rising 40-week moving-average line. The weekly OBV line is positive, as is the MACD oscillator. That's a stronger picture than the daily chart above.
In the Point and Figure chart of MU below, we see a potential upside price target of near $69. A trade at $51.53 will refresh the uptrend and a trade at $48.54 will weaken the chart.
Bottom line strategy: Leaning more on the daily time frame than the weekly chart, I would look for MU to trade sideways for a number of weeks. Look for prices to be bounded by $45 and $55.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.