Swing Trader: Sector Rotation Strategy (TA&FA) Generates 49.2% for AMD
Maximizing Returns with Swing Trading: Analyzing AMD's Sector Rotation Strategy
Swing trading, a popular trading technique that combines technical analysis (TA) and fundamental analysis (FA), has gained attention among investors seeking short-term profits. One such example is the sector rotation strategy applied to Advanced Micro Devices (AMD), which has generated an impressive return of 49.2%. In this article, we delve into the recent performance of AMD, analyze its upward trend, and discuss potential opportunities for traders considering this stock.
Analyzing AMD's Upward Trend:
On June 21, 2023, AMD broke its lower Bollinger Band, indicating a potential upward trend. The lower Bollinger Band serves as a support level, suggesting that the stock may have reached a price level that is undervalued compared to historical data. This breakthrough presents an opportunity for swing traders to take advantage of the upward movement.
Historical Evidence:
When observing previous instances where AMD's price broke its lower Bollinger Band, we find that the stock's price typically continued to rise in the following month. Out of 36 cases analyzed, AMD's price increased further in 32 instances, resulting in a success rate of approximately 89%. This historical data provides a compelling argument for traders considering a bullish stance on AMD.
Potential Strategies for Traders:
Given the recent breakout of AMD's price above the lower Bollinger Band and the positive historical performance in similar situations, traders may want to explore two potential strategies: buying the stock or exploring call options.
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Buying the stock: Swing traders could consider purchasing AMD shares at the current price level, anticipating a continued upward trend. This approach would allow traders to participate in potential gains as the stock heads towards the middle Bollinger Band, which acts as a resistance level.
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Exploring call options: Another strategy to consider is exploring call options on AMD. Call options provide the right, but not the obligation, to buy the underlying stock at a predetermined price (strike price) within a specific timeframe. By purchasing call options, traders can amplify their potential returns if AMD's price continues to rise while limiting their downside risk to the premium paid for the options.
Swing trading, particularly the sector rotation strategy applied to AMD, has demonstrated significant potential for generating attractive returns. The recent breakout above the lower Bollinger Band suggests an upward trend, supported by historical evidence indicating a high probability of further price appreciation. Traders looking to capitalize on this opportunity may consider buying AMD shares or exploring call options. However, it is essential to conduct thorough research, analyze market conditions, and consider personal risk tolerance before implementing any trading strategy.
Momentum Indicator for AMD turns negative, indicating new downward trend
AMD saw its Momentum Indicator move below the 0 level on September 15, 2023. This is an indication that the stock could be shifting in to a new downward move. Traders may want to consider selling the stock or exploring put options. Tickeron's A.I.dvisor looked at 84 similar instances where the indicator turned negative. In of the 84 cases, the stock moved further down in the following days. The odds of a decline are at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Moving Average Convergence Divergence Histogram (MACD) for AMD turned negative on September 15, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 45 similar instances when the indicator turned negative. In of the 45 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where AMD declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for AMD entered a downward trend on September 20, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where AMD's RSI Oscillator exited the oversold zone, of 20 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 6 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where AMD advanced for three days, in of 312 cases, the price rose further within the following month. The odds of a continued upward trend are .
AMD may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 63, placing this stock slightly better than average.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. AMD’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.854) is normal, around the industry mean (7.944). AMD's P/E Ratio (588.235) is considerably higher than the industry average of (53.779). Projected Growth (PEG Ratio) (1.114) is also within normal values, averaging (2.342). AMD has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.022). P/S Ratio (7.194) is also within normal values, averaging (72.586).
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Industry description
Market Cap
High and low price notable news
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a manufacturer of integrated circuits for semiconductors
Industry Semiconductors
AMD and
Correlation & Price change
A.I.dvisor indicates that over the last year, AMD has been closely correlated with ADI. These tickers have moved in lockstep 80% of the time. This A.I.-generated data suggests there is a high statistical probability that if AMD jumps, then ADI could also see price increases.
| Ticker / NAME | Correlation To AMD | 1D Price Change % | ||
|---|---|---|---|---|
| AMD | 100% | -1.46% | ||
| ADI - AMD | 80% Closely correlated | -1.76% | ||
| NVDA - AMD | 77% Closely correlated | -0.74% | ||
| AOSL - AMD | 76% Closely correlated | -3.50% | ||
| ASML - AMD | 74% Closely correlated | -2.29% | ||
| AMAT - AMD | 72% Closely correlated | -1.84% | ||
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