It has not been an easy ride for the past few weeks. Investors still struggle with the buy-the-dip concept in a market where the rallies are sold and the market collapses lower highs rather than higher lows.
So are investors’ favorite stocks, such as Advanced Micro Devices (AMD) .
On Monday, we set out where Nvidia (NVDA) stock can find support. Now let’s talk about AMD, which has fallen in five of the last six weeks.
I especially want to look at AMD given its relative strength to Nvidia.
Both stocks hit record highs in November 2021. Fast forward a few quarters and Nvidia stock recently fell 64% last week as it hit new 52-week lows. AMD has not hit any new lows since July 5, when it fell 57%.
AMD stocks are relatively strong relative to Nvidia stocks, but the business also seems to be holding up better.
Nvidia announced worse-than-expected results in early August, then followed disappointing guidance.
Conversely, AMD beat earnings and revenue expectations and while the outlook was slightly below consensus estimates, it was pretty solid given the environment.
While the company may hold its own — estimates for this year and next are still near highs and significantly higher than the start of the year — AMD shares have been battered.
Scroll to continue
When should you buy AMD stock?
By mid-2020, AMD clearly took a dominant market share and ate Intel’s (INTC) lunch. That set off an explosive breakout: The stock burst into a new trading range between $72 and $100.
About a year later AMD broke out again, this time clearing the $100 level and rising to all-time highs. In the subsequent withdrawals, former resistance held out as support. Once that level was spent ($100), the former $72 range support re-emerged as a key area of interest.
The chart above shows these levels quite well, but as AMD stocks begin to tilt lower, you’ll notice more than just range support in the $70 to $72 region.
That level also includes the rising 200-week moving average and the 2022 low at $71.60. If we revisit this level, it may be beneficial for bulls in the long run to build a starting position.
If AMD hits this level and bounces, a push to the mid-80s isn’t unreasonable and will find its shorter-term moving average there.
If the $71 level fails as a support, it will open the door to a test of the mid-$60s. That’s where AMD stock finds its 78.6% retracement from its all-time high to covid’s low. as well as the monthly VWAP measure. This area could also serve as support.
Finally – and for the sake of the bulls we hope we don’t see it – the $58 to $60 breakout zone could be in play if all of the above support levels fail.