Primary Chart: Linear Regression Channel and Two Long-Term Anchored VWAPs
No matter what method is used to analyze and define the trend, AMD has been stuck in a severe downtrend since its all-time high on November 30, 2021. Like other growth and technology stocks (except for FAANG stocks and Microsoft), AMD's November 2021 peak occurred a month before the S&P 500 (
SPX
) topped on January 4, 2021.
The linear regression channel, set a two-standard deviations from the linear regression line, evidences the downtrend as of today, October 6, 2022. Price is hovering just under the linear regression channel's midline, which is the linear regression "line of best fit."
Two anchored VWAPs also confirm the validity of the downtrend as well. The first anchored VWAP is anchored to the all-time high in November 2021. That VWAP is well overhead at $102.38 as of today, and it slopes downward. Note how it has been resistance at major swing highs after sharp bear rallies over the past year. The second anchored VWAP is anchored to the pandemic-crash lows in March 2020. That VWAP also lies well overhead at $92.16 as of today. These VWAPs show that sellers remain in control despite the impressive bear rallies that have repeatedly occurred since the all-time high.
Until the structure changes materially, and that could take a fair amount of time to unfold, the downtrend remains in effect. Bounces should be sold at proper resistance levels preferably with confirmation that price has begun to reverse back lower in the short term.
If readers are interested, SquishTrade may post a shorter-term view that includes key resistance levels where the current bear rally may find strong resistance. These levels could be watched for reversals where price in the short-term rejoins the larger-degree downtrend.
________________________________________
Author's Comments:
(1) Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate in the comment section. Shared charts are especially helpful to support any opposing or alternative view.
(2) This technical-analysis view does not constitute a trade recommendation or trade setup. Instead, it attempts to offer technical commentary that describes and analyzes price levels, trends, price action, or the broader technical environment as of the publication date. Technical-analysis commentary does not equate to trade setups or recommendations. Within a given price environment, traders bear responsibility for their own trading strategy, risk tolerance, and time frame, and for any due diligence associated with such trades.
(3) This technical-analysis viewpoint could change at a moment's notice, e.g., when price violates a key level of invalidation for a particular view. Further, proper risk-management techniques are vital to trading success.
(4) To the extent countertrend price moves are discussed, consider that countertrend or mean-reversion trading, e.g., trading a rally in a bear market, remains higher risk and lower probability even for the most experienced traders and investors.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified / licensed financial adviser or other financial or investment professional before entering any trade, investment or other transaction.
No matter what method is used to analyze and define the trend, AMD has been stuck in a severe downtrend since its all-time high on November 30, 2021. Like other growth and technology stocks (except for FAANG stocks and Microsoft), AMD's November 2021 peak occurred a month before the S&P 500 (
SPX
) topped on January 4, 2021. The linear regression channel, set a two-standard deviations from the linear regression line, evidences the downtrend as of today, October 6, 2022. Price is hovering just under the linear regression channel's midline, which is the linear regression "line of best fit."
Two anchored VWAPs also confirm the validity of the downtrend as well. The first anchored VWAP is anchored to the all-time high in November 2021. That VWAP is well overhead at $102.38 as of today, and it slopes downward. Note how it has been resistance at major swing highs after sharp bear rallies over the past year. The second anchored VWAP is anchored to the pandemic-crash lows in March 2020. That VWAP also lies well overhead at $92.16 as of today. These VWAPs show that sellers remain in control despite the impressive bear rallies that have repeatedly occurred since the all-time high.
Until the structure changes materially, and that could take a fair amount of time to unfold, the downtrend remains in effect. Bounces should be sold at proper resistance levels preferably with confirmation that price has begun to reverse back lower in the short term.
If readers are interested, SquishTrade may post a shorter-term view that includes key resistance levels where the current bear rally may find strong resistance. These levels could be watched for reversals where price in the short-term rejoins the larger-degree downtrend.
________________________________________
Author's Comments:
(1) Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate in the comment section. Shared charts are especially helpful to support any opposing or alternative view.
(2) This technical-analysis view does not constitute a trade recommendation or trade setup. Instead, it attempts to offer technical commentary that describes and analyzes price levels, trends, price action, or the broader technical environment as of the publication date. Technical-analysis commentary does not equate to trade setups or recommendations. Within a given price environment, traders bear responsibility for their own trading strategy, risk tolerance, and time frame, and for any due diligence associated with such trades.
(3) This technical-analysis viewpoint could change at a moment's notice, e.g., when price violates a key level of invalidation for a particular view. Further, proper risk-management techniques are vital to trading success.
(4) To the extent countertrend price moves are discussed, consider that countertrend or mean-reversion trading, e.g., trading a rally in a bear market, remains higher risk and lower probability even for the most experienced traders and investors.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified / licensed financial adviser or other financial or investment professional before entering any trade, investment or other transaction.
Comment:
Important to note that bear rallies this market can be sharp and prolonged. Price could rally all the way to the 80s or low 90s without changing the current trend structure.
Comment:
Apparently, AMD issued preliminary earnings results before its official earnings reporting date in late October 2022. Just when it appeared AMD was starting to exceed its short-term downward trendline from August 2022 swing highs, a bit of news hits that sends it back below. But this is common in downtrends—stocks rally back to some resistance level and then bad news sends it back to continue the trend. A chart illustrating this will be posted later in a new AMD update.
Comment:
Two updates given the large move after hours in this stock (due to worse than expected preliminary earnings):
The first update is mine:
The second update is from a seasoned options trader @OptionsRising who has an excellent perspective that is an excellent complementary perspective to my recent AMD posts:
The first update is mine:
The second update is from a seasoned options trader @OptionsRising who has an excellent perspective that is an excellent complementary perspective to my recent AMD posts:
Comment:
After falling -15 to -17%, AMD is approaching the lower edge of its downtrend channel. Here is the latest update:
Comment:
Here is a detailed update, thanks for checking it out!
SquishTrade
Related Ideas
