AMD – breakout of this year’s trend. More upside?

*The company is not part of Varchev Finance’s portfolio, but is under watch for Buy. We are looking for a suitable price.
*The stock is owned by many large hedge funds that add to the position periodically.
*It is not a recommendation for trade or investment.

Foundation

The chipmaker has made some good moves in recent months, replacing its chief financial officer and lowering the price of a yet-to-be-released processor aimed at boosting sales. The opening of China is also a positive factor for the company’s future earnings, as China is one of the largest customers in the chip market.

In recent months, there has been increased activity from hedge funds, which periodically add shares of the company to their positions.

Expectations for this year are a strong revenue recovery, which is forecast to continue into 2024. This is a strong positive signal for the company’s long-term performance.

Technical Analysis

A break of the current downtrend is likely to send quotes to a test of the 78-80 zone around the 200 periodic and 23.6 fibo. Volumes are showing increasing buying interest around current levels and DeMarker indicators are supporting the strength of the new bullish move.

Sequential prints a bullish 4, suggesting it still has room to grow. The DeMarker Oscillator is entering overbought territory, which is likely to intensify the upward movement.

I expect a breakout and retest of the 78-80 levels, which would signal a sustained new trend and continuation of the price in an upward direction, towards 38.2 Fibo and 50.0% Fibo in the medium term.

A possible pullback from current levels and a bounce from the Buy zone 61-64 could signal a successful retest of the breakout of the major descending channel and the start of a stronger impulse to break the current resistance at the 78-80 zone.

Short-term indicator

Adjusted EPS on a daily basis has suffered a major decline, but still remains above the current price, which may pull quotes to the upside in the short term.

Bank Foundation

Bank analysts remain bullish, with 72% of them giving a Buy rating, including some of the sector’s biggest names. The 12-month target price implies a 21% return for the period. The positive thing is that in the last 4 months there has been an increase in Buy ratings, which signals that the company is attracting the attention of bank traders.

Market Profile

During yesterday’s session, the price broke above the Value area, which will probably lead to an extension of the monthly range to the levels of 78-84. Volumes are increasing on the upside, which is likely to prevent sharper upside moves.

Conclusion

Current levels are attractive for opening a long position, as the breakout was recent and the price is still relatively low. It can wait for a return to the Buy zone, for a better risk / reward ratio.

Alternative scenario

A break back into the descending channel and a break below the last low will form a Bull trap, which is likely to push the price strongly downward.

The stop loss zone is below the last low, inside the descending channel, measured against the size of the margin account.