Today we are going to look at Advanced Micro Devices (AMD) to see what should be done with the stock. Is the stock poised to blast off or go bust? We will look at the 7 fundamental parameters I look to see if a stock can be considered a growth stock. Then we will take a look at the technical analysis side using the setups I have created and use for my trades. I have no plans to own AMD in the next 72 hours and do not hold any positions in Advanced Micro Devices (AMD).
AMD: Is the stock poised to blast off or go bust?
There are 7 fundamental markers I look for in a stock. I try to only purchase growth stocks so these are the parameters I look for to see if a stock meets the majority of the markers. I prefer to have all seven fulfilled. You can it more in depth here: https://evancarthey.com/how-to-scan-for-winning-stocks-an-insiders-view-to-my-process/
- Market Cap: > $300 million
- EPS growth past 5 years: >0%
- P/E: Over 10
- EPS growth next 5 years: >0%
- Sales growth past 5 years: Over 20%
- Debt/Equity: <0.1
- Sales growth qtr over qtr: Over 5%
Does the stock meet these 7 markers?
- Market Cap: 30.05B (YES)
- EPS growth past 5 years: 37.90% (YES)
- P/E: 86.23 YES
- EPS growth next 5 years: 31.59% (YES)
- Sales growth past 5 years: 4.10% (NO)
- Debt/Equity: 0.99 (NO)
- Sales growth qtr over qtr: 5.90% (YES)
I used Finviz.com for the fundamental analysis screener. With AMD hitting 5 of 7 of the markers it is not what I would consider a growth stuck. Plus it barely got passed the Sales growth quarter over quarter barometer. So if you are looking at investing in growth stocks then I would stay away from AMD right now.
Before I would trade just about any stock that fit my technical parameters. Unfortunately, I have had to learn the hard way that the fundamentals of a stock are just as important (if not more) than the technical setups.
Technical Analysis for Advanced Micro Devices (AMD)
AMD is currently in a long Reverse Lightning Trade setup. The current exit is the pink line at $31.71. But the exit could move lower. If price first goes down and hits the 38% Fibonacci retracement line at $31.81 then the exit would move to $28.75. But if the price continued to move lower and hit the very bottom blue line at $16.03 then all exits would move to just below the 50% Fib retracement level at around $22.15.
After that the exit would not move anymore, that would be the last move even if the price continued to go lower.
There is also a short setup happening right now. The current exit is the pink line at $23.12. The short setup is the 38-127 trade. But if the price continues first to move up and hits the 78.6% Fib retracement line at $30.28 then the exit would move to just north of the 50% Fib retracement line at $25.45. Lastly, if price again continues to move up and hasn’t hit any of the exits yet and hits $34.13 (the blue line at the top) then the exit would move to just north of the 61.8% Fib retracement line at around $27.90.
This would be the final move of the exits even if the price continued to move higher.
If you want a super long term play then there is a buy setup using the 38-127 trade. The exit is currently the pink line at $42.33. To be honest I don’t think price gets there. I think we see more of a retracement back down into the blue box between 38%-61.8%.
One aspect to keep in mind is there are a couple of short setups that never were completed on the way up. I’ve put their exits in pink on the chart above. This doesn’t mean the price is going to go back and take them out anytime soon. What it does mean is if the stock market crashes or AMD tanks then look for these exits to be magnets for the move down.
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