Trading Strategies For AMD Stock Before And After Q3 Earnings

Advanced Micro Devices, Inc AMD was rising about 2% Tuesday ahead of its third-quarter earnings print set to take place after the market closes.

When AMD printed second-quarter results on Aug. 1, the stock was volatile the following day, gapping up 1.61% higher to start the session and closing down 7.02%.

For that quarter, AMD reported second-quarter non-GAAP earnings per share of 58 cents, beating the 52-cent consensus estimate. The semiconductor stock printed revenues of $5.36 billion, which exceeded the consensus estimate of $4.81 billion.

For the third quarter, analysts, on average, estimate AMD will report earnings of 68 cents per share on revenues of $5.69 billion.

Ahead of the event, Rosenblatt analyst Hans Mosesmann reiterated a Buy rating on AMD and a price target of $200. Read More…

From a technical analysis perspective, AMD's stock looks bearish heading into the event, forming a possible bear flag pattern on the daily chart.

It should be noted that 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.

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The AMD Chart: AMD’s bear flag pattern began to form on Oct. 19, with the downward sloping pole created between that date and Oct. 26 and the flag printing since. The measured move, if AMD breaks down from the bear flag on higher-than-average volume, is about 12%, which suggests AMD could fall toward $86.

• On Oct. 25, AMD fell under the 200-day simple moving average, suggesting the bull cycle has ended. Since then, the stock has been consolidating mostly sideways under that area, which was the most likely scenario.
• Within AMD’s flag, the stock has formed a slight uptrend, which was confirmed on Tuesday with the formation of a higher low. If AMD receives a bullish reaction to its earnings print and closes Wednesday's session above the eight-day exponential moving average, the bear flag will be negated and the stock could regain the 200-day SMA.
• If AMD suffers a bearish reaction to the print and falls under the Oct. 26 low-of-day, the bear flag is likely to play out and traders can expect selling to accelerate.
• If AMD traders bearishly on Wednesday, Nvidia Corporation is likely to fall in tandem. If that happens, short-term traders can play the possible downside of Nvidia using the AXS 1.25x NVDA Bear Daily ETF NVDS.
• NVDS is a leveraged ETF aiming to track 125% of the opposite daily performance of NVDA. This leverage boosts trade performance, potentially turning small, brief dips in Nvidia’s stock into significant gains for traders. Using this ETF eliminates the need to borrow NVDA stock from your broker to sell short, offering retail traders an easy and convenient way to play Nvidia bearishly.