Time to Short AMD?
One of the most important indicators I rely on is the 14-days Relative Strength Index (RSI). This helps me identify overbought and oversold conditions in a particular stock. I also pay close attention to support and resistance lines, which can help me predict potential price movements. Another useful indicator is the Tom Demark TD9 sequence, which can provide insight into trend changes and reversals.
Using these technical indicators, I am bearish on AMD. $Advanced Micro Devices(AMD)$
AMD has been on the uptrend since 4 May 2023.
Looking at the day chart, RSI (14-day time frame) is at 65.9 based on yesterday (16May 2023) closing, closing in on the overbought region of above 70.
AMD CHART
Tom Demark TD9 for AMD is on the count of 8 and is looking to form the count of 9 with a perfect sell on 17 May 2023.
Based on day chart, the short-term support level is around 101 with some resistance at 110.
AMD closed up 4.2% on 17 May 2023 following reports that Daniel Loeb's hedge fund Third Point disclosed new stakes in AMD and analyst saying that the PC market looks to be "normalizing" at levels seen prior to the COVID-19 pandemic.
Despite the recent good news, I think the stock has limited upside. Because on top of the AMD's technical indicators, NASDAQ is not looking too good either. $NASDAQ(.IXIC)$
Tom Demark TD9 for NASDAQ composite is on the count of 8 and is looking to form the count of 9 with a perfect sell on 17 May 2023.
NASDAQ Composite chart
Although the RSI for NASDAQ composite is only 60, Alphabet is overbought with RSI at 75. The RSI for both Microsoft and Apple are at 66 and 61 respectively, which is also quite near the overbought region. These 3 Tech giants account for about 34% of the NASDAQ composite. If these giants pullback, they are likely to pull down the indices with them, along with AMD.
Google chart
Microsoft Chart
Apple Chart
Based on the above considerations, I am looking to sell some calls on AMD at the strike prices of 110 and above. If AMD goes up sharply today, I may look to perform a Bear Put strike instead to lower my risk.
Please like and comment if you are also bearish on AMD. Thank you for reading.
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If we decide to short AMD stock, you should be aware of the risks involved.
So many risk in the market to make it downtrend again.
It’s the time we can take short on all of them.