technical analysis AMD

Technical analysis of AMD

AMD, the representative CFD based on Advanced Micro Devices, Inc’s shares, has moved up fairly strongly over the last two sessions as traders appear to be pricing in a fairly strong result from tonight’s earnings report. Last night’s close of $85.41 was a high of about two months. This technical analysis of AMD looks at the daily chart ahead of the company’s earnings report after hours tonight.

AMD’s confirmed ratio of price to earnings (‘PE’) for 2020 was about 80, making it among the more overvalued major tech shares by this measure. PE is expected to drop to about 50 this year. Earnings per share (‘EPS’) beat estimates from Q2 to Q4 of last year.

$100 is a very clear area of psychological resistance on this chart which also coincides with the latest high in January. Low support is less obvious but might occur around March’s lows near $72.

Technical indicators on AMD D1

 

Moving averages are mixed at the time of writing. The 50 SMA from Bands has death crossed both the 100 and 200 SMAs since the start of March. However, the price has now moved back above the 50 and 200 SMAs and is in the value area between the 100 and 200. 

The 100 SMA in the area of $87.50 seems to be the main hurdle upward in the immediate future, while from a technical point of view ongoing consolidation in the value area seems to be possible over the next few days. Volumes does not provide a clear signal at the moment, but the recent gains have been supported by an increase in buying.

Price action

 

The last two upward candles with large bodies might typically be seen as suggesting confidence among participants in a good result tonight and desire to enter at relatively lower prices. On the other hand, markets have generally focussed somewhat less on earnings season this quarter and more on fiscal policy, so the chart might just reflect better sentiment generally as various other ‘risk on’ instruments also move up at least somewhat.

It’s probably unreasonable to put too much emphasis on traditional patterns in the context of earnings coming up tonight. The channel down from the middle of February to early March has been broken clearly, so the main pattern in view now is the negligibly inclined channel up from March to now. A drop after this pattern’s completion looks unfavourable unless there’s a particularly negative surprise tonight; instead, a breakout upward and possibly a lower high around $90-95 seem to be more likely in the immediate future.

Technical analysis of AMD: summary

 

AMD is expected to release its earnings report for the first quarter of 2021 today, 27 April, after hours. The consensus EPS is 38c with the 12 estimates remarkable consistent between 37c and 39c. None of the estimates have been revised in the last four weeks.

The technical picture for AMD is somewhat more positive this week than last, with more gains over the next few days looking quite likely. That said, traders should always be prepared for surprises around earnings and preferably avoid holding large positions around key releases.

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