Advanced Micro Devices, Inc (AMD) stock has gained over 130% in 2019.
For current shareholders and those looking to get in, the $50 question in this early 2020 is none other than: Is AMD Stock a Buy or Sell ?
Let’s examine this argument in this discussion and offer some perspective on how to safely navigate through AMD stock price movement in this year 2020 and the many years to come.
AMD Stock Buy vs Sell: Historical Trends
In July 2016, AMD reported Earnings at the same time as another company.
Both stocks spiked up to $7 on that week following very bullish analysts’ reaction to their reports.
I wrote a note to my trading buddy “Al Stoner” with the underlying question: Which one of the two stocks will be first to $10.
Fast forward in 2020, the other stock barely touched $10 since and it trade at $5 currently.
As for AMD stock price, it is worth over 7 times what it was back then.
The interesting thing is that the bulk of that run took place between June 2018 and now as depicted on the chart below.
AMD Stock Buy vs Sell: Future Predictions ?
In trying to get a sense where Advanced Micro Devices price is headed, I captured the long term historical chart of AMD and posted it on AMD StockTwits room.
I need to remind you that this stock has a very, hum, how should I put it ?
A very colorful Passionate retail following.
They are in full display 24 hours a day on all Social Media, Trading Forums and the Likes.
So, I knew beforehand I was putting myself in the Eye of the Storm by posting a somehow controversial question the AMD Stocktwits..
Before I tell you the outcome of my little survey or better yet social experiment, allow me to submit to you the object of my crime.:-)
My question to the estimated audience was asking if they stock has any more upside from the current price of $51 or so.
By the way, if you are looking for AMD quote, the best is Yahoo Finance.
For a quick historical of AMD stock quote, you can always rely on Investing.com App.
I suggested that history may not bode well for AMD.
The last couple of times in 2000 and 2006 when staged bullish runs and traded this high were followed by equally severe selloffs.
The parabolic rise and the hyperbolic run off are so symmetrical one could venture to suggest the chart is computer generated.
I was not completely off base as my post received 2 likes.
The rest of the replies offered polite justifications for their bullish case.
One member even went as far as predicting $85 price by Halloween in 2020. Time will tell.
Another provided the following well thought explanation:
AMD’s two past share price peaks at years 2000 and 2006 were due to AMD’s release of competitive processors. In both cases the stock price dropped for two reasons: stock market collapse and AMD’s lack of follow through: AMD failed to stay competitive with next generation processors, allowing INTC to surpass them with superior processors.
The all time high share price we see today is the result of three things: stock markets at all time high, AMD’s four straight years of releasing next generation processors (with two years of visibility through 2020 and 2021 of continuing technology superiority over INTC), and the failure of INTC to keep pace (failure to deliver volume production at 10nm fabrication, and as stated by INTC, their 7nm will not be ready until end of 2021).
Be careful when you read charts. Charts do not tell the whole story!
Here is the Link to the full Post.
AMD Stock Through Earnings
Regardless of what the fan base of AMD stockholders may think, there is at least one key fact they cannot ignore.
I would like to highlight the extreme volatile nature of this AMD stock around its Earnings.
By now, you know that we have studied many stocks for Earnings in order to rank or select the most volatile ones.
Well, AMD stock is part of that research.
As a matter of fact, AMD ranks among the highest in that list of most volatile stocks.
Are AMD Stocktwits Followers aware of this High Volatility ? I am not so sure.
Here is the summary AMD last 12 Earnings dating s far back as February 2017.
What can we learn from the above chart ?
AMD stock reaction on the first Day following its Earnings is neither bullish nor bearish.
The stock swings about 4% to the upside and -4% on the downside.
On the second Day, the move in each direction is about 3% while the third day is mostly bearish with -3.5% decrease in average.
With these types of movement, one can really benefit multiple times on both directions through Options trading.
A Better Alternative ? AMD Stock Options
Here are examples of scenarios you may find yourself in regard to AMD stock.
If you hold cheap shares from the past, you can write calls against your shares to generate income.
Alternatively, you can buy protection against your current portfolio of AMD shares by buying Puts options.
Or Simply Trade AMD Options based on what the Smart Money is doing.
Another strategy in trading AMD stock can consist of setting an alert on Finviz.com Screener for High Relative Volume days, Gap Up, Upgrade or Downgrade by the analysts.
We showed that AMD Option chain is very liquid in this discussion.
With enough followers on platforms such as TradingView.com, Finviz.com and StockTwits.com, AMD stock is never short of retail traders looking for quick action.
This is turn will induce enough liquidity to help you trade both stocks and Options.
Here is our video in the pre-market of Q1 2020 Earnings Release.
We presented a study for AMD Stock as a Buy or Sell at its current trading price of $51 by polling the AMD Stocktwits room.
We hope you found this discussion valuable for your trading plan.
If you would like to increase your knowledge and further your understanding of these concepts, may I suggest this similar article.
If you would like see how we put this information in application to make money trading Options, click here.
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