AMD has pulled back to a historically bullish trendline
Advanced Micro Devices Inc (NASDAQ:AMD) has not been spared from the recent tech rout. Shares of the chip giant are down 28% off its Oct. 29 record high of $267.08, and 10% lower on the year. If past is precedent, though, it might be time to buy the dip from this double top formation, with the semiconductor stock testing a historically bullish trendline.
Per Schaeffer's Senior Quantitative Analyst Rocky White, AMD is within 0.75 of its 200-day moving average, after remaining above this level 80% of the time over the past two weeks and 80% of the last 42 trading sessions. This signal has occurred 10 other times in the past decade, after which the security was higher one month later 80% of the time with an average gain of 11.2%. A similar move from AMD's current perch would help the stock not only regain $200, but its year-to-date breakeven level as well.
An unwinding of pessimism amongst options traders could also fuel tailwinds. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMD's 10-day put/call volume ratio sits higher than 98% of readings from the past year.
Plus, the equity's Schaeffer's Volatility Scorecard (SVS) comes in at 94 out of 100. In other words, the shares have consistently realized higher volatility than its options have priced in over the past 12 months.