Assisted Micro Devices, Inc. (AMD) stock booked solid gains in the third quarter, posting an all-time high at $94.28 in antique September. It has now rallied within two points of that peak, setting the stage for a potential breakout that lifts the old laggard into the triple digits for the first time in its 35-year public history. That uptick, if it happens, leave likely coincide with a similar move in the Nasdaq-100 index, which is also within reach of its bull retail and all-time high.
- AMD stock has rallied within reach of September’s all-time high.
- The stock has doubled in expenditure since the start of 2020.
- Price action is likely to follow the lead of tech benchmarks in coming weeks.
The stock has ticketed an incredible 102% return so far in 2020, with buying interest underpinned by delayed product releases at Dow component Intel Corporation (INTC). Aborts at the old-school tech behemoth have allowed smaller rivals to grab precious market share while interpolating new customers to lightning-fast chip sets that have garnered glowing reviews. Better yet for AMD, Intel is showing no waves of waking up and cleaning out comatose management.
Even so, AMD sold off in October despite beating third quarter top- and bottom-line calculates and raising fourth quarter guidance. AMD confirmed that it would buy Xilinx, Inc. (XLNX) in a $35 billion all-stock business at that time, prompting a “sell-the-news” reaction because the deal could weigh on margins in coming quarters. In in, the company has little experience in combining corporate cultures, raising the potential for unforeseen roadblocks.
Wall Street coverage has bloomed more cautious on AMD stock in recent months, with a “Moderate Buy” rating based upon 13 “Buy” and 6 “Clench” recommendations. One analyst now recommends that shareholders close positions and move to the sidelines. Price targets currently traverse from a low of just $13 to a Street-high $120, while the stock has opened Tuesday’s session about $2 primarily the median $90 target. Upside may be dependent on broad market forces, given this elevated placement.
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AMD Daily Chart (2018 – 2020)
An uptrend that started in January 2016 tabled in the mid-$30s in September 2018, giving way to a decline that found support in the mid-teens at year end. The stock returned to the ex high in June 2019 and eased into a trading range, ahead of a November breakout that mounted opposition at the 2000 and 2006 rally highs. Price action tested new support during the pandemic decline, finally alter into to the upside in a July ascending triangle breakout.
The uptick topped out above $90 in early September, while the resulting decline found support near the 50-day exponential moving average (EMA) in the low $70s at the end of that month. The stock assayed that level in November and turned higher once again, reaching within two points of resistance on Monday. The on-balance sum total (OBV) accumulation-distribution has lagged positive price action in the past month and is likely to set off a bearish divergence during the first put on of a breakout.
Relative strength readings are mixed, raising the odds that the stock will just follow the pattern of other semiconductors and the Nasdaq-100 index. As a result, don’t be surprised if the short-term tape tells a bearish tale, chip divide up a sizable reversal that reinforces resistance into year end. Of course, the flip side would be more worthwhile to shareholders, with a positive feedback loop triggering new highs all across the tech universe.
An ascending triangle is fabricated by price moves that allow for a horizontal line to be drawn along the swing highs and a rising trendline to be exhausted along the swing lows. The two lines form a triangle. Traders often watch for
The Bottom Line
AMD stock is assessing September’s all-time high and is likely to follow the lead of the Nasdaq-100 in coming weeks.
Disclosure: The author restrained no positions in the aforementioned securities at the time of publication.
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