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

By Pinchas Cohen/Investing.comStock MarketsAug 04, 2022 07:25AM ET
www.investing.com/analysis/chart-of-the-day-why-amd-may-be-about-to-crash-200628064
Chart Of The Day: Why AMD May Be About To Crash
By Pinchas Cohen/Investing.com   |  Aug 04, 2022 07:25AM ET
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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 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.

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.

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

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

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Comments (30)
Raghu Raghavan
Aptosian Aug 09, 2022 9:40AM ET
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AMD is expensive at this price level; same with NVDA
Mahedi Hassan
Mahedi Hassan Aug 09, 2022 9:40AM ET
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Mahedi Hassan
Mahedi Hassan Aug 09, 2022 9:40AM ET
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Ahmmed son's
Skyye Noir
Skyye Noir Aug 08, 2022 4:07PM ET
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Now if you had said Nvidia.....
Erski Gumby
SB20 Aug 06, 2022 3:51PM ET
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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.
Ron Raymond
Ron Raymond Aug 06, 2022 8:39AM ET
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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.
Sol Wein
Sol Wein Aug 05, 2022 7:59AM ET
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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
Pinchas Cohen
Pinchas Cohen Aug 05, 2022 7:59AM ET
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Thank you
Kris Jay
Kris Jay Aug 05, 2022 5:42AM ET
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so far this prediction is not coming.  do we need to wait until Q3 earnings?
Pinchas Cohen
Pinchas Cohen Aug 05, 2022 5:42AM ET
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My prediction wasn't for the same day. I also provided criteria for for entries.
Brad Albright
Brad Albright Aug 04, 2022 9:45PM ET
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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?
Pinchas Cohen
Pinchas Cohen Aug 04, 2022 9:45PM ET
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Hi Brad. No.
The Writer
The Writer Aug 04, 2022 4:49PM ET
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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 !
Pinchas Cohen
Pinchas Cohen Aug 04, 2022 4:49PM ET
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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.
Erski Gumby
SB20 Aug 04, 2022 4:49PM ET
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BŠ alert
Pwr Strk
Pwr Strk Aug 04, 2022 4:24PM ET
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Pinkas, my friend, I think you just described where the whole market is going with your AMD analysis
Pinchas Cohen
Pinchas Cohen Aug 04, 2022 4:24PM ET
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Happy trading!
Noah Noh
Noah Noh Aug 04, 2022 3:27PM ET
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he really can see the future can't he? lol lol lol
Pinchas Cohen
Pinchas Cohen Aug 04, 2022 3:27PM ET
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You really should read again what I wrote, with care.
 
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