Tech is still holding in, but I want to turn to the semiconductors.
We added a half position in Advanced Micro Devices (AMD) before earnings and it spiked up and spiked down. Heading into this week, the stock is now oversold and it's important now to find support before making another move.
A few things to note...
The red arrow on the left marks the gap up from last summer. I write about gaps often. So you can see that AMD is now dribbling lower into support levels that held since that gap (first red dashed line), but a move to actually fill the gap near $70 will be key on a reversal.
When I turn to Gann and the "square of the top" analysis, we come up with a similar level near $70...
Big red arrow is a level within this square of the top on AMD that comes in at $70. So if AMD trades down to fill the gap, we can bet this is a major level of support.
What do we do with the current calls we have on?
First, if this market is set to break out, the July calls still have lots of time, but we can do a couple of things. First we can buy the other half of the position in July using a lower strike price like $80 or $85 to capture back any losses. Again, if this marks a low we can get a really good entry point on the second half of this trade to record a big gain. The other option is to roll out to August with a lower strike price on a confirmation of a low.
ON Semiconductor (ON) is in the same boat...
There are support levels and likely stop losses near the red dashed lines. Very similar to the setup in AMD, so with ON we can do the same trade with lower strike prices in July or August.
When I put these two stocks together with the VanEck Vectors Semiconductor Fund (SMH) and NVIDIA (NVDA) I've outlined, I'm watching for the "5th wave down" to complete. It could be completed already or have a bit more downside. As I've been stressing, I want to see this week through before acting. With AMD and ON support/stop loss levels in mind, look at NVDA again which I outlined yesterday...
I added the blue hypothetical move to this chart in a 5-wave move down into the 61.8% Fibonacci level and the 200-DMA. One more move down and a reversal would line up with AMD and ON making another move down to fill the gap in AMD and trigger the previous lows in ON. See how these stocks and levels can line up with each other?
Then we take the entire sector and look at SMH...
Does the fifth wave down in SMH break the low from early March near $216 and then rally (blue line)? Again this lines up with the individual stocks (AMD, ON, NVDA) to create a reversal scenario where stop losses are triggered as they briefly break below previous support levels and then rally. This is very typical of a fifth wave move down to create a low.
The Link LonkMay 14, 2021 at 02:23AM
https://ift.tt/3uNDnSL
AMD, ON, NVDA, and SMH... - Stansberry Research
https://ift.tt/2ZDueh5
AMD
No comments:
Post a Comment