Advanced Micro Devices (AMD) - Get Report has been on fire and the gains aren't stopping on the first day of trading in 2020. Shares have risen another 4.3% in Thursday trading following another bullish analyst call.
Shares of AMD have now gained 75% from the October lows and sport one-year gains of 159%. To say that AMD has done well would be an understatement, although it’s particularly true compared with its peers. Nvidia (NVDA) - Get Report and Intel (INTC) - Get Report have gained “just” 78% and 29% over the past 12 months, respectively.
On Dec. 23, RBC gave Advanced Micro Devices a new Wall Street-high price target of $53. Then on Dec. 31, Rosenblatt really raised the bar, slapping a $65 price target on AMD.
Thursday’s analyst action comes after Nomura reiterated its buy rating, but significantly raised its price target to $58 from $40. It seems, despite AMD not yet crossing $50, that Wall Street’s mind is set on even higher prices.
Will Advanced Micro Devices shares run out of gas though? Let’s look at the charts.
Trading AMD Stock
Investors can get a good sense of AMD’s breakaway rally from the October lows. Shares have been screaming higher, with bulls stepping in on any sign of weakness.
Rather than correcting through price, AMD stock has elected to correct through time - however short those rests may have been. In other words, rather than going through a pullback, shares simply consolidated. That’s shown on the chart in various segments (highlighted in blue).
The recent action has several levels calling for attention, the first of which is $50. This big, round psychologically key mark is certainly a goal for bulls. I don’t know whether $50 will be a ceiling or if Advanced Micro Devices stock will rip right through it (more likely the former than the latter), but at some point I believe we get there.
However, bulls needs to know their levels on the downside too.
Should shares drop below the most recent breakout price of $47, then the low of the most recent consolidation area will be on watch. That comes into play near $45. Each drop to the 20-day moving average has been gobbled up by bulls. That’s a buy-the-dip spot for now, but if shares close below this level bulls should certainly sit up and pay attention.
Below it puts the $41.70 to $43 area on watch, which were two marks of prior resistance for AMD stock, and $41.72 also serves as the 78.6% retracement. If those marks don’t hold as support, the 50-day moving average is on the table.
That’s a lot of levels to remember, so let’s keep it simple: $50 is the upside mark to watch for now, while AMD stock is a buy-the-dip name until it proves otherwise. Below the 20-day moving average and investors should use more cautious in the near term.