Chart of the Day: Keeping An Eye on a Bullpen Name for an Opportunity

We have had Advanced Micro Devices AMD on our "watchlist" in the portfolio Bullpen for some time now. This semiconductor stock powered up earlier this year but since then has slipped further into correction territory. In fact, the stock is now back to testing the 200-day moving average, much like it did in late April when the rest of the market underwent a modest correction.

AMD shares did make a nice run, but fell far short of those old highs in March, so a lower high was created on the chart. Currently, we see the candles are purple or pink, which reflects bearish sentiment on the GoNoGo composite of indicators. The parabolic SAR (stop and reverse) is also bearish (dots on top pane), while Moving Average Convergence Divergence (MACD) has rolled over and the stochastics are oversold.

Are the conditions there for a rally? Certainly an oversold bounce, but nothing more than that.

AMD will report earnings next week and if the market appreciates the results and guidance we may see a move back towards the mid-July highs, but that only takes you to resistance. There is plenty of supply to work through but if the report is not taken kindly AMD has much further to fall, which eventually may set up a buying chance.

We'll be watching it closely.

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At the time of publication, TheStreet Pro Portfolio had no positions in any securities mentioned.