AMD - Broadening Descending Wedge / Time for Puts or Collar
0. We have breached the $85.55 and now have a Head & Shoulders going back to August of 2020;
1. We are in a Broadening Descending Wedge, which is "reversal bearish pattern", and we now have support below;
$83.11
$82.50
2. Breach of $82.50 Support: This would open the door to the Height of the Head & Shoulders at $100 - $85 for the break to the lower bounds;
3. This places AMD at
$69.95 before we rebound from this correction, if we continue, and don't find buyers.
4. Scaling In
We suggest scaling back into AMD, if you exited, and started in the $83.11 area if we get there. Add all the way down to $62.50 if we get there, and put
a strategy together for how many shares to buy at each level.
5. Collar Position
Sell the Strike Above and Below
When AMD hits $94, we Sell the $91.50 CALL about 2 weeks out, and we BUY the $87.50 PUT, so we can RIDE this all the way down to hell if we have to;
6. Let's see where the rest of the week brings us.
7. POWELL ON TAP
Tomorrow will be interesting.
- DrChelsea
1. We are in a Broadening Descending Wedge, which is "reversal bearish pattern", and we now have support below;
$83.11
$82.50
2. Breach of $82.50 Support: This would open the door to the Height of the Head & Shoulders at $100 - $85 for the break to the lower bounds;
3. This places AMD at
$69.95 before we rebound from this correction, if we continue, and don't find buyers.
4. Scaling In
We suggest scaling back into AMD, if you exited, and started in the $83.11 area if we get there. Add all the way down to $62.50 if we get there, and put
a strategy together for how many shares to buy at each level.
5. Collar Position
Sell the Strike Above and Below
When AMD hits $94, we Sell the $91.50 CALL about 2 weeks out, and we BUY the $87.50 PUT, so we can RIDE this all the way down to hell if we have to;
6. Let's see where the rest of the week brings us.
7. POWELL ON TAP
Tomorrow will be interesting.
- DrChelsea
Comment:
NOTES
"Burry also drew parallels between the market mania in Germany before inflation took off, and the Reddit-fueled buying of meme stocks this year that led Robinhood to temporarily halt purchases of certain stocks."
markets.businessinsi...sk-2021-2-1030102452
"Burry also drew parallels between the market mania in Germany before inflation took off, and the Reddit-fueled buying of meme stocks this year that led Robinhood to temporarily halt purchases of certain stocks."
markets.businessinsi...sk-2021-2-1030102452
Comment:
Some thoughts for Portfolio Restructuring
A. Real Estate
Real estate is a popular choice not only because rising prices increase the resale value of the property over time, but because real estate can also be used to generate rental income. Just as the value of the property rises with inflation, the amount tenants pay in rent can increase over time.
These increases let the owner generate income through an investment property and helps them keep pace with the general rise in prices across the economy. Real estate investment includes direct ownership of property and indirect investment in securities, like a real estate investment trust (REIT).
B. Commodities
When a currency is having problems—as it does when inflation climbs and decreases its buying power—investors might also turn to tangible assets.
For centuries, the leading haven has been gold—and, to a lesser extent, other precious metals. Investors tend to go for the gold during inflationary times, causing its price to rise on global markets.
Gold can also be purchased directly or indirectly. You can put a box of bullion or coins under your bed if a direct purchase suits your fancy, or you can invest in the stock of a company involved in the gold mining business. You can also opt to invest in a mutual fund or exchange traded fund (ETF) that specializes in gold.
Many investments have been historically viewed as hedges—or protection—against inflation. These include real estate, commodities, and certain types of stocks and bonds.
Commodities include items like oil, cotton, soybeans, and orange juice. Like gold, the price of oil moves with inflation. This cost increase flows through to the price of gasoline and then to the price of every consumer good transported by or produced. Agricultural produce and raw materials are affected as well as automobiles. Since modern society cannot function without fuel to move vehicles, oil has a strong appeal to investors when prices are rising.
Other commodities also tend to increase in price when inflation rises. Some more advanced investors may wish to trade in commodities futures. However, all investors may gain exposure through a publicly traded partnership (PTP) that gains exposure to commodities through the use of futures contracts and swaps.
A. Real Estate
Real estate is a popular choice not only because rising prices increase the resale value of the property over time, but because real estate can also be used to generate rental income. Just as the value of the property rises with inflation, the amount tenants pay in rent can increase over time.
These increases let the owner generate income through an investment property and helps them keep pace with the general rise in prices across the economy. Real estate investment includes direct ownership of property and indirect investment in securities, like a real estate investment trust (REIT).
B. Commodities
When a currency is having problems—as it does when inflation climbs and decreases its buying power—investors might also turn to tangible assets.
For centuries, the leading haven has been gold—and, to a lesser extent, other precious metals. Investors tend to go for the gold during inflationary times, causing its price to rise on global markets.
Gold can also be purchased directly or indirectly. You can put a box of bullion or coins under your bed if a direct purchase suits your fancy, or you can invest in the stock of a company involved in the gold mining business. You can also opt to invest in a mutual fund or exchange traded fund (ETF) that specializes in gold.
Many investments have been historically viewed as hedges—or protection—against inflation. These include real estate, commodities, and certain types of stocks and bonds.
Commodities include items like oil, cotton, soybeans, and orange juice. Like gold, the price of oil moves with inflation. This cost increase flows through to the price of gasoline and then to the price of every consumer good transported by or produced. Agricultural produce and raw materials are affected as well as automobiles. Since modern society cannot function without fuel to move vehicles, oil has a strong appeal to investors when prices are rising.
Other commodities also tend to increase in price when inflation rises. Some more advanced investors may wish to trade in commodities futures. However, all investors may gain exposure through a publicly traded partnership (PTP) that gains exposure to commodities through the use of futures contracts and swaps.
Comment:
C. Bonds
Investing in bonds may seem counterintuitive as inflation is deadly to any fixed-income instrument because it often causes interest rates to rise. However, to overcome this obstacle, investors can purchase inflation-indexed bonds. In the United States, Treasury Inflation-Protected Securities (TIPS) are a popular option. pegged to the Consumer Price Index.
When the CPI rises, so does the value of a TIPS investment. Not only does the base value increase but, since the interest paid is based on the base value, the amount of the interest payments rises with the base value increase. Other varieties of inflation-indexed bonds are also available, including those issued by other countries.
Inflation-indexed bonds can be accessed in a variety of ways. Direct investment in TIPS, for instance, can be made through the U.S. Treasury or via a brokerage account. They are also held in some mutual funds and exchange-traded funds. For a more aggressive play, consider junk bonds. High-yield debt—as it's officially known—tends to gain in value when inflation rises, as investors turn to the higher returns offered by this riskier-than-average fixed-income investment.
Investing in bonds may seem counterintuitive as inflation is deadly to any fixed-income instrument because it often causes interest rates to rise. However, to overcome this obstacle, investors can purchase inflation-indexed bonds. In the United States, Treasury Inflation-Protected Securities (TIPS) are a popular option. pegged to the Consumer Price Index.
When the CPI rises, so does the value of a TIPS investment. Not only does the base value increase but, since the interest paid is based on the base value, the amount of the interest payments rises with the base value increase. Other varieties of inflation-indexed bonds are also available, including those issued by other countries.
Inflation-indexed bonds can be accessed in a variety of ways. Direct investment in TIPS, for instance, can be made through the U.S. Treasury or via a brokerage account. They are also held in some mutual funds and exchange-traded funds. For a more aggressive play, consider junk bonds. High-yield debt—as it's officially known—tends to gain in value when inflation rises, as investors turn to the higher returns offered by this riskier-than-average fixed-income investment.
Comment:
D. Stocks
Stocks have a reasonable chance of keeping pace with inflation—but when it comes to doing so, not all equities are created equal. For example, high-dividend-paying stocks tend to get hammered—like fixed-rate bonds—in inflationary times. Investors should focus on companies that can pass their rising product costs to customers, such as those in the consumer staples sector.
Stocks have a reasonable chance of keeping pace with inflation—but when it comes to doing so, not all equities are created equal. For example, high-dividend-paying stocks tend to get hammered—like fixed-rate bonds—in inflationary times. Investors should focus on companies that can pass their rising product costs to customers, such as those in the consumer staples sector.
Comment:
E. Loans/Debt Obligations
Leveraged loans are potential inflation hedges as well. They are a floating-rate instrument, meaning the banks or other lenders can raise the interest rate charged so that the return on investment (ROI) keeps pace with inflation.
Mortgage-backed securities (MBS) and collateralized debt obligations (CDOs)—structured pools of mortgages and consumer loans—respectively, are also an option. Investors do not own the debts themselves but invest in securities whose underlying assets are the loans.
MBSs, CDOs and leveraged loans are sophisticated, somewhat risky (depending on their rating) instruments, often requiring fairly large minimum investments. For most retail investors, the feasible course is to buy a mutual fund or ETF that specializes in these income-generating products.
Leveraged loans are potential inflation hedges as well. They are a floating-rate instrument, meaning the banks or other lenders can raise the interest rate charged so that the return on investment (ROI) keeps pace with inflation.
Mortgage-backed securities (MBS) and collateralized debt obligations (CDOs)—structured pools of mortgages and consumer loans—respectively, are also an option. Investors do not own the debts themselves but invest in securities whose underlying assets are the loans.
MBSs, CDOs and leveraged loans are sophisticated, somewhat risky (depending on their rating) instruments, often requiring fairly large minimum investments. For most retail investors, the feasible course is to buy a mutual fund or ETF that specializes in these income-generating products.
Comment:
INFLATION IS COMING
- So we have not only a "supply chain issue" in the semi-conductor space, we have inflation that is messing with the Yield Curve, and the spread is horrid. The 5YR / 10YR / 30YR have been going nuts for the last week or two and Market is having a Tantrum. That is what is happening.
This is also Rotation into the Reflation Trade:
Reflation Trade Gets Shot in the Arm With Rate Hikes in Focus
ca.finance.yahoo.com...since-082101076.html
- So we have not only a "supply chain issue" in the semi-conductor space, we have inflation that is messing with the Yield Curve, and the spread is horrid. The 5YR / 10YR / 30YR have been going nuts for the last week or two and Market is having a Tantrum. That is what is happening.
This is also Rotation into the Reflation Trade:
Reflation Trade Gets Shot in the Arm With Rate Hikes in Focus
ca.finance.yahoo.com...since-082101076.html
Comment:
A wave of reflation bets sweeping across global markets is prompting traders to brace for an end to the low interest-rate regime earlier than expected.
The ramp-up in inflation expectations intensified a selloff in Treasuries sending the gap between the 5- and 30-year yields to the widest since October 2014 and bringing forward expectations for U.S. rate hikes to as early as mid-2023. That’s reverberating across assets from credit to emerging markets, and emboldening commodity bulls who are betting on a super-cycle to drive a surge in prices including for copper.
The trade is picking up momentum on prospects for pandemic-relief spending, rising inflation expectations, and a higher real yield that strips out price gains to reflect a pure read on growth prospects. In response, traders across the globe are setting their sights on the prospect of policy tightening by the Federal Reserve and other central banks -- however unlikely in the near term -- as the pace of bond yields’ ascent raise concerns over its impact on risk sentiment and financial conditions.
“The duration spoiler we worried about is upon us,” John Velis, a BNY Mellon strategist, wrote in a client note. “Despite signs of inflation across the supply curve, the Fed will not dial back policy accommodation until at least late 2022, and might even impose yield curve control before then as yields drive higher.”
The ramp-up in inflation expectations intensified a selloff in Treasuries sending the gap between the 5- and 30-year yields to the widest since October 2014 and bringing forward expectations for U.S. rate hikes to as early as mid-2023. That’s reverberating across assets from credit to emerging markets, and emboldening commodity bulls who are betting on a super-cycle to drive a surge in prices including for copper.
The trade is picking up momentum on prospects for pandemic-relief spending, rising inflation expectations, and a higher real yield that strips out price gains to reflect a pure read on growth prospects. In response, traders across the globe are setting their sights on the prospect of policy tightening by the Federal Reserve and other central banks -- however unlikely in the near term -- as the pace of bond yields’ ascent raise concerns over its impact on risk sentiment and financial conditions.
“The duration spoiler we worried about is upon us,” John Velis, a BNY Mellon strategist, wrote in a client note. “Despite signs of inflation across the supply curve, the Fed will not dial back policy accommodation until at least late 2022, and might even impose yield curve control before then as yields drive higher.”
Comment:
So if you are asking what is going on?
This is what is going on.
Brace yourself for some "RISK-OFF" behaviour.
- drchelsea
This is what is going on.
Brace yourself for some "RISK-OFF" behaviour.
- drchelsea
Comment:
Broadening Falling Wedge Technical Pattern
- This Pattern is Very Rare. Hard to Spot; and I think we might be seeing this in AMD. Even Bulkowski the Great, could only find a few examples of this pattern over time in his data analysis spanning 20 years.
www.thegreedytrader....dgeChartPattern.aspx
- This Pattern is Very Rare. Hard to Spot; and I think we might be seeing this in AMD. Even Bulkowski the Great, could only find a few examples of this pattern over time in his data analysis spanning 20 years.
www.thegreedytrader....dgeChartPattern.aspx
Comment:
AMD MORNING HEADFAKES
Also AMD likes to run up in the pre-market, and then until sometimes 10am, then tank for the rest of the day. Wait for the Market to open, and wait for bottoms during the day, and possible Market reversals.
AMD may open up higher, and IT NEEDS to recapture $87.50, then the breakout at $89.11. If we don't get there, we go down.
Also AMD likes to run up in the pre-market, and then until sometimes 10am, then tank for the rest of the day. Wait for the Market to open, and wait for bottoms during the day, and possible Market reversals.
AMD may open up higher, and IT NEEDS to recapture $87.50, then the breakout at $89.11. If we don't get there, we go down.
Comment:
Tomorrow Morning AMD
I would not be surprised to see AMD open at $86.11, run to $87.25 or so, and then reverse and re-test $85.50 / $85.25 / $85.11. We could have a strong reversal here, or certainly $84.11, $83.50 / $83.11 or $82.50/ $82.75.
Nite.
I would not be surprised to see AMD open at $86.11, run to $87.25 or so, and then reverse and re-test $85.50 / $85.25 / $85.11. We could have a strong reversal here, or certainly $84.11, $83.50 / $83.11 or $82.50/ $82.75.
Nite.
Comment:
UPDATE - We are back above the bottom of the Wedge. Market reversed as well. Now consolidation and move higher.
Comment:
March 3 / 2020
UPDATE - We are of the current thinking that everything in this post except for moving "temporarily back above the wedge", is accurate.
We would suggest collaring your AMD position, or if you sit on CALLS, sell and look for stock at a lower entry point.
Broadening Descending - Bear Market
$82.50
It appears we may be in Bear Market, certainly for certain areas, and we should be breaking the $82.50 line below the wedge.
$85.88 / $87.50
Any move higher will be stopped by $85.88 and certainly $87.50.
Looking for breakdown below $80 for buying opportunities in the $70 ranges.
The next few days are critical, but the path of least resistance for Risk ON plays like AMD and NVDA, may be down in the short term.
UPDATE - We are of the current thinking that everything in this post except for moving "temporarily back above the wedge", is accurate.
We would suggest collaring your AMD position, or if you sit on CALLS, sell and look for stock at a lower entry point.
Broadening Descending - Bear Market
$82.50
It appears we may be in Bear Market, certainly for certain areas, and we should be breaking the $82.50 line below the wedge.
$85.88 / $87.50
Any move higher will be stopped by $85.88 and certainly $87.50.
Looking for breakdown below $80 for buying opportunities in the $70 ranges.
The next few days are critical, but the path of least resistance for Risk ON plays like AMD and NVDA, may be down in the short term.
Comment:
$87.50 Break Higher
If we do head to $87.50 look for a false breakout, and confirmation of a run to $90 / $92.50 before jumping on board.
Bear Market Rallies
We may rally from time to time back up towards $87.50 and $90 / $92.50, watch for "short lived rallies, and return back to starting price within days."
This signal will let you know to avoid stocks that act this way until we get to the other side of the Mini Bear.
- drchelsea
If we do head to $87.50 look for a false breakout, and confirmation of a run to $90 / $92.50 before jumping on board.
Bear Market Rallies
We may rally from time to time back up towards $87.50 and $90 / $92.50, watch for "short lived rallies, and return back to starting price within days."
This signal will let you know to avoid stocks that act this way until we get to the other side of the Mini Bear.
- drchelsea
Comment:
UPDATE March 4 2021 4:38EST
So it looks like we cracked through the bottom of the Broadening Descending Wedge Today, with a break of $82.50, and $80.
So we are looking at $9.00 on the Height of the Wedge
AMD BOTTOM
Based on our calculations we like
$73.55
We think we could OVERSHOOT, TO $71.75.
Not sure at this point as to the $70 range holding.
Looking to buy at the following points:
A. $76.95
A. $76.55
B. $76.11
C. $75.50
D. $74.95
E. $74.05
F. $73.75
We are HOPING, that if tomorrow is yet another slaughter, that we can
hold the lower bounds of the Wedge height of the break from
$82.50 - $9 (Height of Broadening Wedge)
$71.50 - Major Bottom
$37.75 X 2
DR CHELSEA BOTTOM PREDICTION (INTRADAY ?)
$75.50
Also $37.75 X 2 = $75.50
We told you to buy at $36.75 at the Bottom:
But we are calling it $37.75:
So it looks like we cracked through the bottom of the Broadening Descending Wedge Today, with a break of $82.50, and $80.
So we are looking at $9.00 on the Height of the Wedge
AMD BOTTOM
Based on our calculations we like
$73.55
We think we could OVERSHOOT, TO $71.75.
Not sure at this point as to the $70 range holding.
Looking to buy at the following points:
A. $76.95
A. $76.55
B. $76.11
C. $75.50
D. $74.95
E. $74.05
F. $73.75
We are HOPING, that if tomorrow is yet another slaughter, that we can
hold the lower bounds of the Wedge height of the break from
$82.50 - $9 (Height of Broadening Wedge)
$71.50 - Major Bottom
$37.75 X 2
DR CHELSEA BOTTOM PREDICTION (INTRADAY ?)
$75.50
Also $37.75 X 2 = $75.50
We told you to buy at $36.75 at the Bottom:
But we are calling it $37.75:
Comment:
So we CALLED THE BOTTOM ON March 20, 2020,
And we will try to CALL IT AGAIN.
Lets hope the technicals don't get worse tomorrow.
- Drchelsea
And we will try to CALL IT AGAIN.
Lets hope the technicals don't get worse tomorrow.
- Drchelsea
Comment:
UPDATE MARCH 5 2021
Comment:
UPDATE
We were waiting for $73.75 but NO DICE, we did BACK UP THE TRUCK AT $74.55.
Me thinks we may have bottomed on AMD.
- Drchelsea
We were waiting for $73.75 but NO DICE, we did BACK UP THE TRUCK AT $74.55.
Me thinks we may have bottomed on AMD.
- Drchelsea
1. Rampant speculation (meme stocks, social media pump and dumps, stonks, Reddit, Wallstreetbets, short squeezes, degenerate investing, Gamestop, et al).
2. Low growth rates (pandemic, virus, lockdowns, business closures, et al).
3. High un-employment.
4. Peak valuations in many if not all areas (value can still be found in many areas of the Market).
5. Low-interest rates (About to change drastically and quickly).
It looks like very stormy waters ahead.
Issues:
1. Consider selling Gold this time, it is different, Silver is moving inversely due to it's utility.
2. Consider selling all Crypto.
3. Consider buying US Dollars.
4. Consider buying tangible assets (real estate, commodities, other inflationary hedges)
5. Consider specialized securities that can maintain a portfolio's buying power including certain sector stocks, inflation-indexed bonds, and securitized debt.
6. Consider inflation-sensitive investments.
7. Consider hedges with specialized instruments that go up with inflation (TYO, TTT, TMV, TBX, TBT, TBF, SJB, PST, DFVS)
The moves in the Market in the last month or so, have directly corresponded with the rise in Treasury yields starting in early January, and the close-to-crash that we had a week or so ago, was directly related to a "technical break out" of the yield to the 2016 high.
I have some thoughts at the end on Real Estate, Commodities, Bonds, Stocks, Leverage-Loans, and Debt Obligations. Also shows why Burry's number one investment is Google. It also note the movement of the FCPI (Stocks for Inflation Index). The theory on Google is that they can increase the price of their essential services with inflation, so they are the perfect company to weather the storm.
Here are the top holdings of FCPI:
AAPL Apple Inc. 5.32%
MSFT Microsoft Corporation 4.65%
COP ConocoPhillips 4.32%
STLD Steel Dynamics, Inc. 3.23%
COG Cabot Oil & Gas Corporation 3.03%
RS Reliance Steel & Aluminum Co. 2.72%
PM Philip Morris International Inc. 2.11%
GOOGL Alphabet Inc. Class A 2.05%
NEM Newmont Corporation 1.92%
UNP Union Pacific Corporation 1.91%
LLY Eli Lilly and Company 1.89%
NEE NextEra Energy, Inc. 1.85%
MO Altria Group Inc 1.84%
CSX CSX Corporation 1.79%
VICI VICI Properties Inc 1.79%