Hi friends,

This is a quick update on our AMD trade setup from June 25th. The price action is now approaching completion.

I will share some thoughts about this trade and how it looks now.

You can read the original note here:

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

1. Approaching the final target

This morning, AMD reached $187 on the back of acquisition news.

With this acquisition offer, it’s unclear whether Silo AI will unlock multiples of billions of Total Addressable Market for AMD, or if AMD is just desperately trying to play catchup on the AI hype.

My view on reading the news, as well as narratives, is generally that, news are not price but timing catalysts. It provides a push for the stock along the existing path of least resistance. In today’s case, the acquisition news for AMD simply helped AMD complete the wave v ($187-$190) to which it was already en route.

Moreover, positive news does not always mean the stock will go up, hence the famous saying of “buy the rumour and sell the news”.

AMD Hourly Chart

Click here for the full-size chart.

Because wave (iii) reached the 2.0 extension of wave (i) from the wave (ii) low, wave (v) has a natural target of $189.

AMD 5-min chart

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AMD has retraced slightly after the early morning pop. I think for wave v (in yellow), we just finished wave circle-4, with the very final wave circle-5 of v to finish at $189.

2. Two ways of taking profit

I think there are two ways of taking profit, depending on one’s risk tolerance.

1) One can just get out of the trade once the target is reached, as they would when hitting a stop-loss. This ensures one can always get the right risk-reward with minimal execution risk or mid-trade interference.

2) The second way is to deploy a trailing stop loss. There are a lot of different indicators for this, like the “Average True Range Trailing Stop loss” or “Chandelier Exit”.

The benefit of using a trailing stop loss is to ensure we keep riding the winners if the moves become extended and not let winners turn into losers when the price action sours.

3. I’m medium-term bearish

AMD Weekly Chart

Click here for the full-size chart.

As I posted in the original note, I see AMD moving towards the $100-118 range in a larger degree wave C down.

This is part of a large corrective move after AMD completing its previous 5 waves in March this year.

This technical analysis is backed by my fundamentals, where AMD has to achieve some wonderfully high operating and free cash flow margins in the next 10 years to justify the current price.

4. Follow me on X for live updates

I have shared the trade progress throughout the past 2 weeks on X - please give me a follow if you want live price action updates.

Tools I find useful:

TradingView: I use TradingView for all my chart analysis. It is very fast and simple to play with, including the mobile and desktop apps. Sign up here to get $15 off your new TradingView plan.

Koyfin: I use Koyfin for stock screening, comparative analysis, and fundamental analysis. It provides very comprehensive data and features at a reasonable price. Sign up here to get 15% discount off all Koyfin plans.

Fastgraphs: I find Fastgraphs very useful in gauging whether a stock is underpriced or overpriced versus the fundamentals. Sign up here to get 25% off using the coupon “AFFILIATE25” at the check out.

A quick “Thank You”

I really appreciate your support for this newsletter.

Please feel free to share any suggestions or comments, either directly through email or DM me on X

— Yimin