How To Trade Advanced Micro Devices Stock Heading Into Q4 Earnings

Advanced Micro Devices, Inc AMD is set to print its first-quarter financial results after the market closes on Thursday.

When the semiconductor company printed its fourth-quarter results on Feb. 1, the stock soared 12% higher over the six trading days that followed before topping out at the $132.96 level on Feb. 9, where AMD entered into a long-term downtrend.

For the fourth quarter, AMD printed a massive beat, reporting non-GAAP earnings per share of 92 on revenues of $4.826 million, which beat the consensus estimate of 76 cents per share and revenues of $4.52 billion.

See Also: What's Going On With AMD Shares Today?

The reaction AMD receives post-earnings is likely to be the deciding factor on whether the stock will trade in bullish or bearish territory for the time being, because although AMD is trading in an uptrend, the stock is being held down by a descending trendline.

Of course, holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat. Options traders particularly, those who are holding close dated calls or puts, take on extra risk because the intuitions writing the options increase premiums to account for implied volatility.

The implied move for options of AMD expiring this week is 9.96%.

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The AMD Chart: AMD has been held down by a descending trendline on Dec. 28, 2021, making fairly consistent lower highs and lower lows on the weekly chart, while briefly entering into a few short-term uptrends on the daily chart and other smaller timeframes. On April 27, AMD reversed course into another uptrend, making a consistent series of higher highs and higher lows.

• On Tuesday, AMD attempted to break up bullishly from the descending trendline but failed and wicked from the level. If closes the trading session below the $91 level, it will print a shooting star candlestick, which could indicate lower prices will come on Wednesday.
• AMD’s relative strength index (RSI) has been making a series of higher lows, which indicates momentum to the upside is increasing. The stock’s RSI is currently measuring in at about 43%, which means AMD has room to move in either direction without becoming overbought or oversold.
• If AMD receives a bullish reaction to its earnings print, the stock is likely to gap up above the descending trendline and enter into a stronger uptrend on the daily chart. If the reaction is bearish, the stock could be headed toward the 52-week low at the $72.50 level.
• AMD has resistance above at $92.75 and $99.82 and support below at $87.45 and $84.24.