Advanced Micro Devices (NASDAQ:AMD) isn’t without its share of risks. But with good deals happening off the price chart and an attractive sale being offered in shares today, a well-placed, risk-adjusted purchase remains a solid approach to investing in the future of AMD stock at a discount. Let me explain.
AMD stock is by no means immune to 2019’s seasonally fearful October price action. Shares have sunk 5% in just three sessions and are nearing four month lows in a calendar month known for its bearish tendencies. Still, with elevated trade war risks, growing impeachment worries and weak economic reports this week pointing to a recession, bears have almost universally started the month out in strong fashion.
But all of this worry actually makes for an interesting opportunity in Advanced Micro Devices stock.
The other fact that remains for AMD stock investors, but is easy to forget in today’s more trying market environment, is that Advanced Micro Devices continues to score big deals confirming its successful turnaround and growing acceptance among top market players.
This past spring, Advanced Micro Devices managed to land a substantial $600 million U.S. Department of Energy contract. And in late summer, AMD stock announced a huge enterprise win with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Twitter (NYSE:TWTR) selecting the company’s second generation EPYC chips for their data centers. Now, the world’s largest company is once again showing its confidence in Advanced Micro Devices.
Already an AMD client, Microsoft (NASDAQ:MSFT) announced this week the company is parting ways with Intel (NASDAQ:INTC) for its new Surface 3 laptop and Surface Pro X. The tech giant is offering its buyers custom processing solutions powered by Advanced Micro Devices’ Ryzen chip and technology from Qualcomm (NASDAQ:QCOM).
Ultimately, if you’re searching for bearish catalysts — they’re easy enough to find in today’s market. But it’s also not terribly difficult to locate positive findings for Advanced Micro Devices stock. And given today’s sale on the AMD price chart, the opportunity to invest more wisely in the company’s future is nearly here.
AMD Stock Weekly Chart
Aside from the broader market’s wrath taking AMD stock down 5% this month, shares have also been discounted on the price chart into a very supportive-looking position for buyers. Wednesday’s low has narrowly undercut the low made in Advanced Micro stock immediately in front of August’s data center news, which shot shares aggressively higher.
The return in the AMD stock price over the last two months has resulted in a bullish double bottom pattern. Coupled with an oversold stochastic, a breach of former angular resistance from 2000 – 2006 and given that shares are challenging the 38% retracement level from 2018’s December low, the formation looks supportive for buyers. And combined with today’s Microsoft collaboration, the reasons for going long Advanced Micro Devices are even stronger.
At the same time, given today’s more hostile market for buying stocks, my proposal for AMD stock investors is to wait for a small amount of price confirmation before purchasing shares.
The advice is to put AMD on the radar for buying above this week’s high of $29.54. In the short-run, the entry gives away some potential upside with AMD stock near $28.10. But as this strategy allows a weekly candlestick reversal pattern to confirm the double bottom as shares move back through yearly resistance once again; the fourth time is looking like the charm for tomorrow’s buyers of Advanced Micro Devices.
Disclosure: Investment accounts under Christopher Tyler’s management currently own positions in Advanced Micro Devices (AMD) and its derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits.