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AMD Loose Technical Analysis

On Dec 16, AMD was downgraded, and made a reversal candle which touched the 200 moving average (ma), as the RSI touched 50.0. Also on this date, it made a 50 beneath 200ma cross, called the "death cross".

From that time, AMD consolidated and has risen well, reversing the death cross very quickly. This also made the RSI bounce from 50 fairly sharply. This seems very bullish.

On each of the last 7-8 prior earnings announcements, one or both of the two major averages, 50/200ma, was falling. If you have a sharp eye, you'll notice in the July quarter, the 200ma was actually flat (neutral), and the 50ma rising. However the 50ma was rising very sharply and AMD essentially made a crash course with it, which collapsed the stock after earnings. By the time the 200ma turned notably upward, the 50ma was falling, and remained that way until Dec 31.

Today, both the 50 and 200 moving averages are rising and bullish for the first time in 2 years.

Before the prior two earnings announcements, AMD rose very dramatically, and was trading above the upper bollinger bands the day prior to earnings. Currently, it is within the upper bollinger.

Below I've included the 2 day chart to illustrate the patterns in a bit less clutter, so you'll have to look at a daily chart elsewhere to verify those observations.

AMD seems to have formed a deep and very symmetrical cup and handle pattern. One of the key points of a true cup and handle is that the handle must remain above least 50% of the height of the cup formation. AMD has done this. The height of the cup was approx $2.5, and AMD fell a maximum of almost exactly 1.25 from the right formation of the cup, and made a double bottom.

(click to enlarge)Click to enlarge

One can see that the test of 3.25 happened twice and the stock was supported strongly each time. Another point to notice is the extreme symmetry of the cup points, each at ~4.42.

On the 2 day chart we can also see the 200 bar/ 50 bar MA's in blue/red, making the 400/100ma's. AMD has found the 400ma difficult on two times ahead of earnings, with resistance. AMD is above the 400ma for the first time in years. AMD also has managed to turn the 100ma above the 400ma, a more dramatic golden cross, and turned the 100ma higher. The MACD is far less extended currently than in late May-August.

Volume isn't included in the above chart but the volume of recent can easily be interpreted as follow through volume from the May run up.

Support levels are 4.2, 4.1, 4, and the 100ma at 3.7. AMD is bullish. If AMD was to close the day in the red, look for either a reversal of the move on higher volume, or a loss at slightly lower volume.

Disclosure: I am long AMD.