Following a merry start to the trading week, it’s looking like old times in more than one way for Advanced Micro Devices (NASDAQ:AMD). Let’s see what’s happening both off and on the AMD stock price chart to come up with a stronger risk-adjusted strategy for positioning.
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A little more than a month ago as shares of AMD were gifting investors for a seventh straight week, Wall Street’s choir section began to take notice. From RBC to Cowen and then Wells Fargo, the sell-side busily began to sing praise for Advanced Micro Devices stock. To be clear though, the investment firms’ reiterations, target-lifts and recommendations weren’t entirely without merit.
The truth is it’s been a standout year for Advanced Micro Devices. For one, the company has earned hard-won gains in its data center business in 2019 at the expense of rival and chip giant Intel (NASDAQ:INTC).
Moreover, AMD has captured market share in all its business units driven by smart and well-designed product introductions and managerial execution, and Wall Street’s enthusiasm has been duly rewarded.
Shares of Advanced Micro Devices stock are up nearly 20% in December alone. What’s more, AMD stock is its best levels since 2000 and spitting distance from its all-time-high of $48.50. Still, if timing is everything, this month’s gains didn’t come easy on the price chart for investors taking their cue from those broker calls.
Now and once more, RBC is back at it. On Monday analyst Mitch Steves reiterated his outperform rating. Additionally, Steves lifted the firm’s Advanced Micro Devices stock target price from $50 to $53 and boosted AMD’s profit forecast 14.5% above consensus views.
The 14% AMD stock price premium relative to Tuesday’s close is backed by ‘improved business’ in AMD’s data center and gaming customers. Following strong channel checks, Steves also expects other sell-side analysts to raise their forecasts and outlooks on Advanced Micro Devices stock.
Weekly Chart on AMD Stock
Our advice last month on how to approach AMD stock just as Wall Street analysts were finishing serving bullish firsts, seconds and thirds of bullish recommendations on shares proved quite prescient. The purchase strategy correctly impressed upon investors to wait for a meaningful pullback after the sizable and overbought rally in Advanced Micro Devices’ stock price.
Like clockwork, much healthier opportunities unveiled themselves in AMD stock. Over the following couple weeks, Advanced Micro Devices stock pulled back by as much as 11%.
Now and similar to last month, near-term overbought stochastics and aggressive Bollinger Band positioning on the daily and weekly time-frames warrant waiting.
Additionally, with a three-month rally looking eerily like the run-up in AMD stock immediately preceding 2018’s large correction, waiting for shares to consolidate and neutralize today’s overly-bullish behavior looks even more compelling.
Disclosure: Investment accounts under Christopher Tyler’s management currently and continue to 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.
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