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As picky as advanced micro-devices (AMD) – Get the report maybe for traders the whole picture is pretty clear.
Investors are keeping this in mind as AMD heads to its earnings report, expected after the market closes on Tuesday.
TheStreet is posting a live blog on AMD’s fourth quarter results after today’s close. Please check our home page then for more details.
AMD and Nvidia (NVDA) – Get the report have stolen the show when it comes to chipmakers, especially with Intel (INTC) – Get the report less than stellar performance over the past year.
So what’s the overall scheme of AMD? It’s simple. Stocks tend to consolidate for months at a time, rise dramatically, and then consolidate or correct again.
The action has traded well lately, for four sessions. It helps that he received a bullish pre-profit hedge. But the bulls will look for more gains after printing.
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Trading in AMD shares
Daily chart of the AMD stock.
Graphic courtesy of TrendSpider.com
Even with the big step back in March, look at how AMD stepped back into the 1950s and cut sideways. Once the title erupted and broke past the previous high, it only took nine sessions for the title to rally over 38%.
Eighty-one sessions later and AMD’s stock was still stable after more than three months of consolidation. Then, over the course of three days, the stock rose 10.5% to new highs.
Now 10.5% isn’t the 38.5% tear we have seen before, but the stock tends to repeat this pattern. Just look at the table above.
Last week we saw a great reversal of the previous resistance (highlighted by the blue arrow). It was very bullish price action, as the earlier resistance had turned to support.
In the days that followed, AMD stock recovered the 10-day moving average and VWAP measure of its high-volume breakout in December.
It is now winding just below the 261.8% extension and the resistance of $ 98.
Ideally, we would see a breakout above these marks, with AMD going over $ 100. In that scenario, that would put $ 108 on the line, extending 161.8% from the November low to the September high.
If the stock has a bearish reaction to earnings, look for $ 87 and the 100-day moving average for support. Below these marks there could be a risk-free situation for AMD in the short term.
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