Are semiconductor stocks a buy now? Nvidia (NVDA) – Get Report and Advanced Micro Devices (AMD) – Get Report have been rallying after a quick pullback last week.
Of course, the rest of the market was under pressure too, but this group has a lot of investors’ attention.
Nvidia stock completed its 4-for-1 stock split, which went into effect on Tuesday. While it was under pressure that day, shares have popped on Wednesday, up 3.5%. AMD rose too, up 1.6% on Wednesday.
However, while Nvidia won’t report earnings for about a month, AMD will report earnings next week. That puts AMD in focus among traders.
While the bull case is pretty clear for why AMD will reach $100, the stock has not had the same type of success that Nvidia has had lately.
Let’s look at the technicals to see if there’s anything to glean.
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Trading AMD Stock
AMD stock has been struggling with the $88 to $89 area, but was able to push through this zone last month.
However, it ran into the $95 resistance zone that kept a lid on the stock in the fourth and first quarters.
With the latest dip, we have an “ABC” pullback down to the 200-day moving average. This measure held as support, as AMD is now rotating higher.
Bulls now want to see the stock clear $90. Not only does that put AMD over the $88 to $89 area I mentioned earlier, but also over the 61.8% retracement and the 21-day moving average.
That will put last week’s high on the table – “B” on the chart – near $92. That’s followed by $95. Above this month’s high at $95.44 and the all-time high near $99 is in play, along with $100.
On the downside, watch for a break of $87. Below that mark puts this week’s low in play, along with the 200-day moving average. Below the 200-day, and the 50-day moving average may be in play.
This name has been consolidating for a long, long time. I view the eventual breakout as a “when” not “if” scenario, but we must follow the technical layout if we’re going to trade this successfully.