It hasn’t been a smooth ride over the past few weeks. Investors are still struggling with the buy-the-dip concept in a market where stocks are selling off and the market is faltering. lower highs instead higher lows.
That’s also true of investor-favorite stocks, such as Advanced Micro Devices (AMD) .
On Monday, we outlined Nvidia’s position (NVDA) stock may find support. Now, let’s talk about AMD, which is down five of the last six weeks.
I would especially look at AMD because of its relative strength vs. Nvidia.
Both stocks were hitting all-time highs in November 2021. Fast forward a few quarters and Nvidia stock was recently down 64% last week as it was making new 52-week lows. AMD hasn’t made new lows since July 5, when it was down 57%.
AMD stock has relative strength vs. Nvidia stock, but its business also seems to be holding up better.
Nvidia pre-announced worse-than-expected results in early August, followed by disappointing guidance.
Conversely, AMD beat earnings and revenue expectations and while the guidance was slightly below consensus estimates, it was quite solid given the environment.
While its business may be holding up — estimates for this year and next year are still near the peak and up significantly since the start of the year — AMD stock has taken a hit.
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When to Buy AMD Stock
In mid-2020, AMD was clearly taking dominant market share and eating Intel (INTC) lunch That triggered an explosive breakout: The shares exploded into a new trading range between $72 and $100.
About a year later, AMD broke away again, this time clearing the $100 level and rising to all-time highs. On subsequent pullbacks, the previous resistance served as support. When that level gave out ($100), the post-range support at $72 re-emerged as a significant area of interest.
The chart above lays out these levels well, but as AMD stock begins to decline, you’ll notice more than one range of support in the $70 to $72 area.
That level also includes the rising 200-week moving average and the 2022 low at $71.60. If we revisit this level, it could be advantageous for long-term bulls to accumulate a starting position.
If AMD tags this level and bounces, it is not unreasonable to push into the mid-$80s and that is where it will find its shorter moving average.
If the $71 level fails as support, it opens the door to a test of the mid $60s. That’s where AMD stock finds its 78.6% from the all-time high down to the covid low, as well as the monthly VWAP measure. This area could also act as a support.
Finally – and for the sake of the bulls, we hope we don’t see it – the breakout zone of $58 to $60 could be in place if all the support levels above fail.