As demanding as advanced micro devices (AMD) – Get the report may be for traders, the pattern of the larger image is quite clear.
Investors are taking this into account as AMD addresses its earnings report, which will be released after the market closes on Tuesday.
TheStreet releases AMD’s fourth-quarter earnings in bulk after today’s close. See ours home page then for more details.
AMD and Nvidia (NVDA) – Get the report they have stolen the program when it comes to chip makers, especially with Intel (INTC) – Get the report a less than stellar performance over the past year.
What is AMD’s biggest image pattern? It is easy. Stocks tend to consolidate for months at a time, rising sharply and then consolidating or correcting once again.
The shares have been trading well lately, up to four sessions. It helps that you have received upward coverage prior to earnings. But the bulls will look for more gains after printing.
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AMD stock trading
Daily chart of AMD shares.
Chart provided by TrendSpider.com
Even with the big setback in March, look at how AMD fell back to $ 50 and cut to the side. Once stocks exploded and removed the previous high, it only took nine sessions to add up to more than 38%.
Eighty-one sessions later and AMD shares were still flat, after more than three months of consolidation. Then, over the course of three days, the shares rose 10.5% to new highs.
Now 10.5% is not the 38.5% rip we saw before, but stocks tend to repeat this pattern. Just look at the graph above.
Last week we saw an excellent reversal of the previous resistance (highlighted by the blue arrow). It was a very bullish price action, as previous resistance had become support.
In the following days, AMD shares recovered the ten-day moving average and the VWAP measure from its high-volume break in December.
It is now rolling just below the 261.8% spread and the $ 98 resistance.
Ideally you would see these differences with AMD exceeding $ 100. In this scenario, it would put $ 108 at stake, an extension of 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 acts as support. Below these marks, there could be a risk situation for AMD in the short term.