Advanced Micro Devices

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Nearest Resistance: $4.50

Nearest Support: $4

Catalyst: Buyout Rumors

Yesterday, Advanced Micro Devices ( AMD) rallied on a new set of buyout rumors. Today, shares are recovering from the optimism on high volume. After posting a big move higher in yesterday's market session, shares are only giving back 1.14% today, sliding to $4.35 as I write. That suggests that while Mr. Market is discounting the rumors a bit, he's not willing to ignore them at this point.

The rumors may be enough to make AMD complete a bottoming pattern, a welcome technical setup after shares have slid from prices above $8 in just a few months. A breakout above $4.50 resistance would complete a bullish tower bottom reversal pattern, giving traders a buy signal for shares.

Until that happens, hold off. Headline risk is pretty high in any name that has acquisition rumors swirling.

AMD shows up on a recent list of 3 Stocks to Sell if They Crash on Earnings.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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