This chip stock turnaround story should beat the market from here, according to the charts

Published Mon, Jan 22 202412:27 PM ESTUpdated Mon, Jan 22 202412:48 PM EST

Semiconductor stocks tend to exhibit upside leadership in strong tapes. The impressive rally late last week was exemplary of that, with semiconductor sector benchmarks up 3% to 4% on both Thursday and Friday, comparing favorably to the major indexes. The momentum and relative strength behind the semiconductor sector drew us to the chart of Micron Technology, Inc. (MU ), which has seen a long-term turnaround that began with a breakout above the weekly cloud model (shaded area on the chart) in September 2023. Our long-term momentum indicators shifted decisively positive in Q4 2023, suggesting the cyclical uptrend is sustainable in the months ahead. Intermediate-term momentum is strongly positive per the weekly MACD, shown in the chart. This suggests MU can see a return to resistance at the 2021 high, which is the only major hurdle on the chart, aligned with the highs from 2000. MU saw a corrective phase to start 2024, but Friday's strength has resulted in a bullish short-term momentum shift to suggest the primary uptrend is resuming. Initial support is at the rising 50-day (10-week) moving average, currently near $80, above which warrants a bullish short-term bias. Lastly, MU is poised to outperform the broader equity market, noting it has reversed a three-year downtrend in its ratio versus the S & P 500 Index (SPX), which now possesses positive long-term momentum per a rising 200-day moving average. We expect additional outperformance from not only MU, but also many of its peers in the semiconductor sector as the cyclical bull trend keeps hold of the broader market. —Katie Stockton with Will Tamplin Access research from Fairlead Strategies for free here . DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . 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