As complicated as Advanced Micro Devices (I HAVE D) – Get the report may be for traders, the larger image pattern is quite clear.
Investors hold this as AMD enters its earnings report, which is due to close on Tuesday, after the market closes.
TheStreet is blogging live AMD earnings in the fourth quarter after today’s close. Please check Home then for more details.
AMD and Nvidia (NVDA) – Get the report they stole the show when it comes to chip makers, especially Intel (INTC) – Get the report less stellar performance in the last year.
So what’s the bigger picture model from AMD? It’s simple. Actions tend to consolidate for months on end, move sharply higher, then consolidate or correct again.
The shares are trading well lately, increasing by four sessions. It helps you get coverage before you win. But the bulls will look for more gains after printing.
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Trading in AMD shares
AMD daily stock chart.
Graphically, courtesy of TrendSpider.com
Even with the big withdrawal in March, look at how AMD came back in the $ 50s and cut sideways. Once the stock broke out and removed the previous high, it took the stock only nine sessions to get over 38%.
Eighty-one sessions later and AMD’s stock was still flat, after more than three months of consolidation. Then, over three days, the stock rose 10.5% to new highs.
Now, 10.5% is not the 38.5% rip I saw before, but the stock tends to repeat this pattern. Just look at the chart above.
Last week, we saw an excellent reversal of the previous resistance (highlighted by the blue arrow). This was a very steep price action, as the previous resistance had become support.
In the following days, the AMD stock recovered the 10-day moving average and the VWAP measure from its high volume release in December.
It now revolves just below the 261.8% extension and the $ 98 resistance.
Ideally, we would see a decline in these brands, with AMD rising above $ 100. In this scenario, it would put $ 108 at stake, extending 161.8% from the November low to the highest in September.
If the stock has a downward reaction to earnings, look for $ 87 and the 100-day moving average to act as a support. There could be a short-term risk situation for AMD under these marks.