It has not been a smooth ride the past few weeks. Investors are still struggling with the buy-the-dip concept in a market where the rallies are being sold and the market is putting in lower highs rather than higher lows.
That’s true for investors’ favorite stocks, too, like Advanced Micro Devices (AMD) .
On Monday, we outlined where Nvidia (NVDA) stock may find support. Now let’s talk about AMD, which is down in five of the past six weeks.
I especially want to look at AMD given its relative strength vs. Nvidia.
Both stocks were hitting all-time highs in November 2021. Fast-forward a few quarters and Nvidia stock was recently down 64% last week as it was making new 52-week lows. AMD has not made new lows since July 5, when it was down 57%.
AMD stock has relative strength vs. Nvidia stock, but its business also seems to be holding up better.
Nvidia preannounced worse-than-expected results in early August, then followed up with disappointing guidance.
Conversely, AMD beat on earnings and revenue expectations and while guidance was slightly below consensus estimates, it was pretty solid given the environment.
While its business may be holding up — estimates for this year and next year are still near the highs and up considerably from the start of the year — AMD stock has been battered.
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When to Buy AMD Stock
Chart courtesy of TrendSpider.com
In mid-2020, AMD clearly was taking dominant market share and eating Intel’s (INTC) lunch. That triggered an explosive breakout: The shares 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 surging to all-time highs. On the ensuing pullbacks, former resistance held as support. Once that level gave out ($100), former range support at $72 has reemerged as a significant area of interest.
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