This year has been an exciting one for Advanced Micro Devices, Inc. (NASDAQ:AMD) to say the least. After years of living a largely irrelevant existence relative to rivals like Intel Corporation (NASDAQ:INTC) and Nvidia Corporation (NASDAQ:NVDA), a regrouped AMD has finally come up with some new — and fiercely competitive — products. Namely, its Ryzen CPU and Vega GPU lines are major head turners within the industry.
It’s been an exciting time for owners of AMD stock as well. Although its new technologies have yet to have a chance to drive a serious boost in recent AMD earnings reports, that time is coming. AMD shares are up more than 100% for the past 12 months and are up more than 600% for the past couple of years, as traders have anticipated Vega and Ryzen giving Advanced Micro Devices its day in the sun.
A stock’s price is an ever-changing number though, sometimes driven by hope, and at other times driven by little more than its own momentum, for better or worse. And right now, in the transitory time between the launch of several new products from Advanced Micro Devices and when the company gets to report how well these products sold, shares themselves are a bit of a psychological battlefield. On one side, you’ve got the latecomers and convinced bulls, ready to ride the stock even higher. On the other side of the table, you’ll find the would-be profit takers and the doubters.
AMD Stock Under the Microscope
Sometimes a stock’s chart drops important but very obscure hints about where mental lines in the sand have been plotted, and subtly suggests to the astute technical analyst what’s brewing.
This is not one of those times.
Rather, the development of a major move is well-defined and crystal clear here. Advanced Micro Devices shares are being pushed higher (see below) by a rising support line (yellow) that extends back to early 2016. There’s a pretty big horizontal resistance level (orange) at $15.50 and a minor technical ceiling (light blue) at $14.50.
Clearly, with the support and resistance lines on a collision course, AMD stock can’t simply drift aimlessly until further notice. The bulls or the bears (or both) are going to have to commit one way or another. The question is, which way will that be?
Nobody really knows, if we’re being honest. That’s trading. Then again, making predictions isn’t quite the point of this exercise. The point here is to primarily figure out when and where the stock will reach the tipping point. After months of sideways consolidation, once the ball gets rolling in one direction or the other again, it’s apt to remain in motion for a while. There’s your “trade.” We can only wait and see which direction that trade is pointed.
AMD Earnings Report Around the Corner
While we can’t be sure when AMD stock will break above or below this converging wedge pattern, there’s a catalyst looming that could accelerate the start time for the move. On Tuesday, October 24th, Advanced Micro Devices will be releasing its third quarter numbers. It will be the first chance investors have to get a feel for how well the Ryzen CPU is selling, even though it’s come nowhere near its full sales pace yet.
If we’re lucky, AMD will finally break free from its ever-tightening boundaries rather than finding itself increasingly constricted.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter.
