Are semiconductor stocks a buy now? Nvidia (NVDA) - Get NVIDIA Corporation Report and Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report have been rallying after a quick pullback last week.
Of course, the rest of the market was under pressure too, but this group has a lot of investors’ attention.
Nvidia stock completed its 4-for-1 stock split, which went into effect on Tuesday. While it was under pressure that day, shares have popped on Wednesday, up 3.5%. AMD rose too, up 1.6% on Wednesday.
However, while Nvidia won’t report earnings for about a month, AMD will report earnings next week. That puts AMD in focus among traders.
While the bull case is pretty clear for why AMD will reach $100, the stock has not had the same type of success that Nvidia has had lately.
Let’s look at the technicals to see if there’s anything to glean.
Trading AMD Stock
AMD stock has been struggling with the $88 to $89 area, but was able to push through this zone last month.
However, it ran into the $95 resistance zone that kept a lid on the stock in the fourth and first quarters.
With the latest dip, we have an “ABC” pullback down to the 200-day moving average. This measure held as support, as AMD is now rotating higher.
Bulls now want to see the stock clear $90. Not only does that put AMD over the $88 to $89 area I mentioned earlier, but also over the 61.8% retracement and the 21-day moving average.
That will put last week’s high on the table - “B” on the chart - near $92. That’s followed by $95. Above this month’s high at $95.44 and the all-time high near $99 is in play, along with $100.
On the downside, watch for a break of $87. Below that mark puts this week’s low in play, along with the 200-day moving average. Below the 200-day, and the 50-day moving average may be in play.
This name has been consolidating for a long, long time. I view the eventual breakout as a “when” not “if” scenario, but we must follow the technical layout if we’re going to trade this successfully.