Hi everyone. Today I’ll be covering one of the most well-known AI and semiconductor companies in the world:
Advanced Micro Devices Inc. (NASDAQ: AMD)
AMD has been in a long-term uptrend since 1974, with a series of higher highs and higher lows. In 2016, a steeper support trendline formed, with the move greatly accelerating to the upside. Based on the current monthly candle, we are set for a bullish Stochastic crossover for the first time since Nov’23 (subject to earnings on the 29th and the monthly candle close). The last 2 bullish crossovers have led to 100% returns (or higher).
AMD has been consolidating below the red resistance trendline since March. It finally broke out of this trendline in September, and has spent the past 3 weeks retesting the breakout on gradually declining volume. In the process of doing so, it has also formed a new support trendline (in blue). With earnings on deck on the 29th, next week will be key to future upside for this name. While the Stochastic formed a weekly bearish crossover, it can still be a false signal or invalidated.
On the daily chart, AMD produced a Stochastic bullish crossover and was strong on a day that the broader markets were weak. There will be shenanigans before earnings (like what happened to TSLA) and I do not expect to see a “real” move until the 30th.
However, the breakout and retest that took place gives me greater confidence in the long side. A strong earnings should see AMD push towards the partially filled 185.61-188.05 gap over the next few weeks, while a miss could see further consolidation and even a “panic” move to as low as 142.14, which I expect to be bought up. Over the long-term, I expect AMD to make new ATHs above 227.30.
This thesis is invalidated if AMD loses the 2016 trendline and loses the 130.79 level. This could lead AMD a lot lower towards the 94.28 level (~ 40% drawdown).
In light of the favourable technical setup, I continue to be BULLISH on AMD.
Sentiment: BULLISH
Invalidation: Close below 2016 trendline or close below 130.79 (I will update again if this happens)
Summary (with Price Targets - NFA):
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Broke out of, and retested its Mar’24 resistance trendline, with a short-term move towards 185.61-188.05 possible on strong earnings, and a longer-term move towards new ATHs above 227.30 if the bullish crossover is confirmed post-earnings
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A break and close below 130.79 could see a 40% drawdown towards the 94.28 level
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