The purpose of this post will come in two parts.
1. Do a Hindsight 20/20 analysis and provide for my new followers. (By popular demand, lol)
2. Make a forecast of what to occur in the next two weeks.
Defining the Chart:
To get started, let’s define the chart from the top to bottom.
The most obvious on the chart is levels. Two resistance levels are in red; $4.58, as a hard top resistance and $4.49 as a multi-top resistance. The price action support is roughly $4.18, a key level where most candles return frequently is displayed in blue. Below that are green lines, labeled upper and lower bounds; average trade ranges from last month’s price action from the manufacturing deal announced in China.
You may also notice 3 yellow rectangles. These are defining where the relative underlying trends are within of session highs and session lows, then connecting them. They will be important later on. Something new this time that I am adding to my charts are more indicators. After experimenting with many trades, I am highly favorable of the indicator. For the sake of simplicity I will only cover the and .
The weekend from May 13th to 16th started price action and sideways movement started to shift from a change in executive management. It cracked upper bounds of where it should have been trading and it was in uncharted territory. It later market adjusted to a gap fill of $3.69. Here, I could have entered for a retest but it was above charted resistance so I stayed out. DANGER ZONE! Unfortunately for me, the price continued to more north.
Ever since that point, May 20th, each day had more and more hype and the price continued to move upward. Virtual reality, Polaris card, Needham conference etc… after it broke $4.00. I knew I missed the train on this one and did not want to chase. By the end of May, I had to withhold and exert a significant amount of internal self-discipline not to chase, not to chase, do not fucking chase, because I had the feeling that as price was getting more and more overweight it will death drop, leaving many bag-holders caught (w/ pants down) making a hard decision to turn a trade into an investment. I kept asking myself where the fuck is market correction?!!
June 1st - Death Drop
June 2nd - Death Drop
This second death drop is more significant because it is exhaustion gap filling to a new price action , (roughly $4.10ish) from previous weeks. Possibly a short collusion, from the same sentiment that I was feeling. Later, a short squeeze brings it backs to near highs again. Crap. I missed out on the signal again.
This is where it gets interesting. tell a lot when used correctly. When are used, it shows, how positively or negatively the trend is tracking; it is a tracker. Most traders buy in the lower half of the bands and sell in the upper half of the bands. Simple, right? Not quite. Remember, it is a indicator, so if it starts pinching , expect something major to happen.
The trend in the 2nd , traded 2 standard deviations above the mean (when it rides the outer dark green lines), then broke through moving average line (pink). When that occurred, a huge wave a relief is upon me. The price is finally adjusting. Phew. I highlighted in the the signals of the cross. External catalysts were the poor to neutral sentiment in the pricing of the Polaris cards (later revised) and the release of Nvidia’s GeForce 1080s.
As of now, the price is relatively stable around $4.40 - $4.50, there is enough data in this uncharted territory to start making future forecasts within a justifiable range.
First. Identify the pattern. Ascending Triangle! Wow pretty obvious right? Yellow triangle on the chart. In the bigger picture, now if you extrapolate that yellow triangle, tracking the hard dashed-blue line, do you see a larger Ascending Triangle Pattern stretching all the way back to May 11th? If you did, pat yourself on the back. Good job. I only noticed this a few days ago.
My hunch on this is that if this is to truly rally and run, it needs to crack the Multi-Top Resistance of $4.49 and later the HardTop Resistance of $4.59. Only then, will short sellers will buy to cover; squeezing the price higher. If catalyzed by positive news, this will only increase the fervor of buying more. In the bull limelight, I see an upside of 0.20 cents per share upside, optimistic at breaking $5 when more and more technology is released. I am strongly bullish that $5 will occur sometime in the near future, if not 2 weeks, I would not be surprised if under 2 months from now.
Lastly, I would like to close out in the contrarian view. If it fails to break resistance, and retreats. I feel it would be appropriate to average down and buy more. The swing trade/value investment side says in the longer run, as long as $AMD continues to innovate and remains competitive with $NVDA the risk is worth it.
6/16/2016 - Canaccord Genuity – Upgrade from Hold -> Buy, Price Target: $6.00
6/15/2016 - Morgan Stanley - Reiterated Rating – Sell, Price Target: $2.65
6/13/2016 - Jefferies Group - Reiterated Rating – Buy, Price Target: $4.50 -> $5.50
6/13/2016 - MKM Partners - Reiterated Rating – Buy, Price Target: $4.00 -> $5.00
5/26/2016 - Wells Fargo - Reiterated Rating – Outperform, Price Target: $4.25
I averaged up a while back and missed this tracking post.