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The Advanced Micro Devices, Inc. (AMD) Stock Bears Are In Hibernation

Believe in the AMD stock narrative, but play it smarter with an options collar

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There are bulls and there are bears when it comes to Advanced Micro Devices, Inc. (NASDAQ:AMD). Yet despite an increasing preponderance of the latter, AMD stock is shaping up on the price chart and for a bullish collar spread in front of earnings in two weeks. Let me explain.

The Advanced Micro Devices, Inc. (AMD) Stock Bears Are In Hibernation
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To be a trader. The occupation or preoccupation invokes swashbuckling imagery of investors battling, as well as trying to outwit and take advantage of other investors seeking to do the same thing in a stock like AMD. Can’t we all just be friends?

The answer to that is ‘not a chance.’ My own biased hope is AMD stock’s nay-saying and increasingly bearish short interest continues to take it on the chin. The fact is since announcing its latest enterprise GPU for the market, conditions look more and more promising off and on the price chart for the semiconductor outfit and turnaround play.

Bottom-line, I’m keeping the faith as AMD moves ever closer to the next earnings confessional on October 24. But while I might be optimistic, hedging the bullish outlook with Advanced Micro Devices’ options to avoid getting unnecessarily roughed up is my only unwavering position at all times.

AMD Stock Daily Chart

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Yesterday in an unrelated article I quipped ‘there’s always a line somewhere.’ Looking at the AMD daily chart and I’m reminded of that eternal truth. In this instance and just over one month ago I wrote about my technical concern for Advanced Micro Devices shares.

AMD had fallen for a handful of days within what appeared to be a bear flag pattern which developed after shares broke up-channel support formed off of the stock’s 35% corrective low from the late February high. That’s worrisome, right?

Backing our unease, shares of AMD had also retreated back below the 50% retracement level of its corrective base as the 50-day simple moving average acted as resistance and held our spied bear flag in check. All things considered, the situation didn’t look good technically for bulls near-term.

Much to the satisfaction of my own longer-term hedged position, AMD failed to comply with the moderately bearish outlook. The anticipated breakdown of flag support never occurred and over the past month shares have managed to build another uptrend within a fairly large corrective base that’s now in its seventh month.

So what happened? The technical hold of the bear flag may have to do with the 62% retracement level or ‘line’ based on the May to late July uptrend. At the time I can state the Fibonacci level was overlooked. And in hindsight it has acted as support while maybe solidifying our playful point about charts. As I’ve said, there’s always a line somewhere.

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