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Can AMD Break Out on Earnings? Here's the Trade

AMD has been stuck in a range lately. Will earnings break it out or send it lower? Either way, here are the key levels to know.

Now that we’re getting into the thick of earnings season, investors will be looking for some of the more popular names to report. That includes Advanced Micro Devices  (AMD) - Get Advanced Micro Devices, Inc. Report, which is scheduled to release its results Tuesday after the markets close.

AMD is a favorite among both traders and investors. Known both for its impressive growth and its tendency to trade very technically, bulls love this name.

The recent disappointing earnings from Intel  (INTC) - Get Intel Corporation Report didn’t do much to spook investors, either.

While that may typically be grounds for caution, AMD has been eating Intel’s lunch lately. Intel’s loss could be gains for AMD and Nvidia  (NVDA) - Get NVIDIA Corporation Report. With the strength in gaming, we should see just how well AMD is doing when it reports.

Let’s look at the charts to see what levels will matter after the results are out (and here's what to look for in the report). 

Advanced Micro Devices and Nvidia are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMD or NVDA? Learn more now.

Trading AMD

Daily chart of AMD stock.

Daily chart of AMD stock.

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On the chart above, the technical-trading of AMD is apparent. Even as the market was getting crushed in February and March, AMD stock held the 200-day moving average amid its decline.

On the rebound, shares remained trapped below downtrend resistance (purple line) and the $58 level. That’s what made its breakout so powerful in July, as shares soared up toward $88 in just a few weeks.

That $88 mark has become range resistance, with AMD only spending a few days above it. On the downside, support has come into play near $74.

Additionally though, we have a few trend marks to consider as well, as the stock is putting in a series of higher lows and lower highs. That wedge pattern is highlighted with blue lines on the chart.

Now back over the 50-day moving average, bulls want to see AMD break out over $88 on earnings. If it can close above this mark, it opens the door to the prior high up at $94.28.

From there, the 261.8% extension would be in play at $95.71, followed by the $100 mark.

On the downside, investors want to see the $74 range support mark hold as support, along with the 100-day moving average. If AMD stock loses that area as support, it has two gap-fills in play, near $68 and $62. The latter also comes into play near the 200-day moving average.

That second gap-fill level would be a tremendous buying opportunity if we see that level over the next week or two.