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Fan Yang

AMD Cracks Rising Trendline After a Bearish Earnings Reaction

Advanced Micro Devices Inc. $AMD has been on the year but found resistance at $34.20 a week ago for the second time in July. Then after earnings came out after hours on 7/30, price opened up bearish during the 7/31 session. 

Here's a quick summary from Yahoo Finance:

AMD Q2 Earnings In Line, Revenues Beat Estimates, Down Y/Y

Advanced Micro Devices AMD reported second-quarter 2019 non-GAAP earnings of 8 cents per share, which matched the Zacks Consensus Estimate. However, the figure declined 42.9% year over year.

Revenues of $1.531 billion beat the Zacks Consensus Estimate of $1.524 billion. However, the top line declined 13% year over year.

The year-over-year decline can be attributed to weak Computing and Graphics segment and semi-custom revenues.

Notably, AMD’s stock has returned 83.3% in the past one year, outperforming the industry’s rally of 25.2%.

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AMD Daily Chart

(click to enlarge)

Channel Broken:
- On the daily chart, we can see that price has cracked a rising channel support.
- The overall trend is still bullish, but this price action suggests we might see a period of consolidation/bearish correction ahead.
- In this scenario, AMD might be a buy-on-the-dip candidate. 
- I would love it around $27 and $25. $25 is going to be a test of a key support/resistance pivot area and the 200-day simple moving average (SMA). 
- But I suspect if the market is indeed still bullish, the $28.50 to $29 area might provide support. 

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