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Chart Of The Day: Why AMD May Be About To Crash

ByPinchas Cohen
Published 08/04/2022, 07:25 AM
Updated 07/09/2023, 06:31 AM

Many market participants concluded that Intel's (NASDAQ:INTC) disaster would be Advanced Micro Devices' (NASDAQ:AMD) boon.

Perhaps in the same way that Samsung's (KS:005930) devices catching fire provided Apple's (NASDAQ:AAPL) iPhone sales a boost in 2016.

Intel's Q2 sales dropped from $19.6 billion to $15.3 billion year-on-year (yoy). AMD posted a 70% yoy jump in its quarterly revenue to a record $6.6 billion. In addition, operating cash flow exceeded $1 billion.

But AMD did join Intel in warning that the PC market, which surged during COVID-19 lockdowns, was falling. Accordingly, AMD provided weak guidance for Q3 due to the spending slowdown driven by sky-high inflation and aggressive monetary tightening.

What does this mean for the stock? If it follows its trading pattern, I expect it to lose at least two-thirds of its value.

AMD Weekly

AMD completed an H&S top between August 2021 and April 2022. The stock confirmed the neckline's resistance this week, having climbed above it only to fall back below it. Remember that a weekly price is ultimately judged based on its close at the end of Friday's trading. Also, in late May, bulls managed to bid prices back above the neckline. However, bears drove them back hard in early June. Bulls tried again, with a five-week straight rally, but so far, the neckline is holding.

Based on its height, the implied target is $34. However, there may be other bulls waiting at the $74 level, the lows of September and November 2020, and May 2021. That support area will likely coincide with the long-term uptrend line since the 2018 low, providing significant support.

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However, if H&S follows through and the price falls below that level, it will have created a massive H&S top since August 2020, and based on height, the stock's target is $17.

Trading Strategies

Conservative traders should wait for the price to develop a long red candle, then short a corrective rally.

Moderate traders would short after the long red candle.

Aggressive traders could be short now.

Trade Sample

  • Entry: $100
  • Stop-Loss: $110
  • Risk: $10
  • Target: $70
  • Reward: $30
  • Risk-Reward Ratio: 1:3

Disclaimer: The author currently does not own any of the securities mentioned in this article.

Latest comments

AMD is expensive at this price level; same with NVDA
ok
Ahmmed son's
Now if you had said Nvidia.....
Any more in depth fundamental analysis on AMD? Their server business is phenomenal and may be wnough to carry them through. Intel, OTH, is not as well.
Be careful when talking about shorting, meme seekers and banks/institutions with unlimited margin bread and butter mainly comes from short squeezing and they don't care about fundamentals, just how deceitful they can be.
What about your Gold call running out of steam? I look at you and i can tell you have no idea what you are talking about
Thank you
so far this prediction is not coming.  do we need to wait until Q3 earnings?
My prediction wasn't for the same day. I also provided criteria for for entries.
Chart Of The Day: Why AMD May Be About To Crash Aug 04, 2022 12:41PM ET Are you short AMD? Any AMD puts or calls?
Hi Brad. No.
Totally disagree with you Pinch! I’ve been fortunate and have made millions in the last 30 days on AMD ! Purely on fundamentals and not hocus pocus !
Appreciate your opinion. I made a claim for a reversal,  which means the stock went up till now, no? As to hocus pocus, people always called what they don't understand magic.
BŠ alert
Pinkas, my friend, I think you just described where the whole market is going with your AMD analysis
Happy trading!
he really can see the future can't he? lol lol lol
You really should read again what I wrote, with care.
40% up in 1 month is not sustainable for its fundamentals (weaker - only 11% projected growth for 2023) and technically too.
Happy trading!
RSI at 71.5 and above upper BB. My read is it will reverse course at current price level around 104.
HAPPY TRADING
Long tail up.
from my perspective*
 Thank you!
Very we'll may be, though the post is called chart of the day.
What is your timeline for the "crash" Pinchas? I agreed with your analysis of pre-market open, but I forgot to see the breakout on the daily frame of 98 which actually deviates from the descending channel.
If it closes above $110, I would recall my bearish call.
Are you short AMD? Any AMD puts or calls?
yes AMD said personal computers sales will be soft in the coming qtrs. but they have a smaller footprint in that area now. Also taking INTC customers with their new products!!Buying more today
Happy trading, Ed!
AMD has broken the major downtrend line my friend. It just needs time to confirm. Movement mainly depends on market.
I don't consider a downtrend line since Nov 30 to be major. Same for the fact that the price didn't track according to it. Finally, I'm not impressed with trendlines. I care much more about peaks and troughs. Happy trading !
The channel is drawn incorrectly. If drawn starting at top then $98 is a breakout which is very bullish
I disagree. There is no channel that starts from the top. it's this channel, or no channel, in my opinion. A channel or a trendline must not start from the price's extreme point. An experienced charter identifies the technical pressure points and tracks his trendlines accordingly. This one is mine. It's a free country. You have the right to be wrong :).
AMD shud sue this writer for negative announcements, analysts has to guess, not declare.
I shud der at the thought.
 today Nasdaq red, and AMD +5.8%. how?
current demand outpacing supply
$17? AMD winning in CPUs and will likely win in GPUs with upcoming releases. AMD steamrolling the competition. Q3 guidance and full year guidance remain incredibly strong, especialky in this economic environment. What are you smoking?
Merry and Pippin's pipe *****
by the way, the same type of charts were applied there at other companies stock graphs yesterda, with the article title: "is it time to buy xy...." lol . you are joke guys there who writes these articles and do these analyses :)
meaning that same descending channel meant "time to buy" yesterday for a stock, now this one for amd says crash . lol
So, just because other analysts have a different interpretation mine is necessarily wrong? Also, there must be some mistake, as a descending channel is inherently bearish.
AMD is a volatile stock. I've traded it for a yar or so always making money. It has almost a cult following, so any sell-off will be followed by a bounce back. Still, it's not a stock I want to own a long time, so I'll wait for that sharp sell-off.
Well now that you enlightened me.
Dan, if it has a cult following you're only strengthening my argument. If we're hitting a hard recession, the cult will stop speculating about what it knows not and save the money for groceries and rent.
, I think you made a mistake, or you're perhaps ironic? You say negative things about the company, but assign it thrice the value (?).
ok
34$ target in log chart, minus 17$ in arithmetic chart.
This time you may be right, finally :)
Been right more than once. You should check out my column.
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