In this current market environment, cold stocks remain cold and hot stocks remain hot. In between, issues will have a period of consolidation, then a catalyst that instigates a continuation of the trend.
Perhaps no issue has been as hot as Advanced Micro Devices (NASDAQ: AMD) over the past few weeks and is today’s PreMarket Prep Stock Of The Day.
Long Consolidation Period Ahead Of Q2 Report: With its high beta of 2.13, AMD is a mover. When the market goes up, it goes up more and when the market goes down, it goes down more. From April 8 until July 21, it was in a prolonged trading range from $48 area to the $58 area.
What's Bad For Intel Is Great For AMD: On July 22, the issue broke out of the trading range, rallying from its previous day close of $57 to $61.79 on heavy volume and no specific news. The following day, it gave back a few bucks of those gains, ending the July 23 session at $59.47.
After the close on that day, its main competitor in the space, Intel Corporation (NASDAQ: INTC) announced an earnings beat, but dropped a bomb on investors when it announced it expects initial production shipments of its first Intel-based 7nm datacenter CPU design will not happen until the first half of 2023.
The following day, AMD leaped from $59.57 to $69.40 on one of its heaviest volume days in the history of the company.
Throw In A Q2 Beat: The company kept the party going when it announced an earnings EPS beat of 2 cents along with a slight sales beat. The company also raised EPS and sales guidance.
The report instigated another leg higher, rallying from its previous day close of $67.61 to $76.09.
A Few Sleepy Days And Another Catalyst: AMD had an inside day on Friday, with the low just above Thursday's low of $75.06 at $75.07 and an exact double top at $78.96. Monday’s session was a yawner with another inside day and nearly matching closes ($77.43 and $77.67).
Double Catalyst Instigates Another Breakout: There were two catalysts to instigate another leg higher in the issue in today’s session. On Monday’s "Fast Money" on CNBC, Stephanie Link said she thinks the momentum is going to continue in the issue and it's a stock she wants to own.
The primary catalyst for the move is from Jefferies, which raised its price target on the issue from $86 to $95.
Price Action Off The Open: After a modestly higher open, AMD immediately bottomed at $77.99 and began to move higher. The pace of the rally accelerated once it breached the double top at $78.96. Once the Jefferies note began to make its rounds and the market rallied off its lower open, AMD went into blastoff mode.
It has continued to make new highs for sessions with the current one being $84.19 as 12:00 p.m. EST.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
The Link LonkAugust 04, 2020 at 11:02PM
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PreMarket Prep Stock Of The Day: Advanced Micro Devices - Benzinga
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