AMD's Stock Looks To Be Anticipating An Earnings Beat

Advanced Micro Devices Inc AMD is set to report first-quarter earnings on Tuesday after the closing bell and traders and investors believe the semiconductor company is set for another big beat.

When AMD released its fourth-quarter earnings on Jan. 26, it reported sales of $3.244 billion, beating the Street estimate of $3.02 billion, and EPS of 52 cents compared to the Street’s estimate of 47 cents.

AMD provided guidance for first-quarter 2021 earnings and sees sales coming in between $3.1 billion and $3.3 billion.

Although a stock’s reaction to earnings can be unpredictable, technical traders can look to the chart to glean information on the stock’s possible path.

Related Link: Looking Into Advanced Micro Devices Return On Capital Employed

The Advanced Micro Devices Chart: After reaching an all-time high of $99.23 on Jan. 11, AMD fell into heavy consolidation which coincided with a seven-week long tech rout. The stock found a temporary bottom at $73.86 on March 8 and set up a bullish inverted head and shoulder pattern. It broke up from that pattern on April 13 and after making a move up to $83.79 consolidated again in a second bullish inverted head-and-shoulder pattern.

The bullish break from the second pattern came Friday and the stock continued to move north with momentum on Monday. Within the first 1.5 hours of trading Monday morning, AMD's stock had over half the amount of bull volume as Friday’s entire trading session.

AMD is trading above both the eight-day and 21-day exponential moving averages (EMAs), which is bullish, and on Monday morning the stock opened just below a resistance level at $83.40 before jumping up over it with bullish continuation.

Bulls want to see a bullish continuation Monday and Tuesday to push AMD up towards its next resistance level at $90.19. A bullish reaction to earnings could then pop the stock over that resistance where it could make a run towards the $95 mark.

Bears want to see a bearish reaction to earnings which could see AMD retreat back to the $83 level. If the stock is unable to hold support there, it could drop towards the $80 mark and back test the downward sloping neckline of the second inverted head and shoulders pattern.