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Trade of the Day: Advanced Micro Devices, Inc. (AMD) Aiming for $8

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Advanced Micro Devices, Inc. (NASDAQ: AMD ) - AMD is the second-largest producer of microprocessors and a prime supplier of chips to Microsoft Corporation (NASDAQ: MSFT ). On Friday, Microsoft reported strong fiscal-first-quarter earnings and revenues due to a rising demand for cloud-based software and services.

There are several stocks that benefit from their relationship with MSFT, and AMD is one obvious beneficiary. In addition to supplying MSFT, on Oct. 14 AMD announced a partnership with online retail giant Alibaba Group Holding Ltd (NYSE: BABA ), an agreement that will supply the retail giant with AMD's Radeon Pro GPUs for cloud services.

The deal with BABA brought AMD to the attention of Zacks, who now ranks it as a No. 2 buy and says that the company is expected to increase earnings growth by 56.1% this year.

After four years of negative results, with its stock trading between $2 and $4, Advanced Micro Devices broke to a bull market in late April with an impressive Break-Away-Gap. Since that breakout, AMD established a solid bull channel trading around its 50-day moving average and even breaking above the channel in late-July.

Profit-taking occurred in September, but the stock found support at its bullish support line and rallied back, now holding above the 50-day moving average on solid volume. The rally in late September closed one gap that opened during September's profit-taking, but another at $7.07 to $7.25 remains open.

Gaps in bull-market corrections act as magnets, almost always closed by buyers.

For the last seven sessions, AMD has fought a successful battle to stay above the crucial 50-day moving average, and yesterday closed at $7.01, the high of the day, and several cents over its 50-day moving average. Positive technical activity places AMD on my buy list at $7 with a trading target of $8 for a proposed gain of over 14%.

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The Nasdaq and Tech Stocks Quietly Lead

The Nasdaq was almost unheralded as it broke to a new closing high at 5,531.82. The junior index has jumped almost 30% from its February low, and yet on Monday most investors were focused on the Dow and its attempt to overcome the 20,000 line.

The post Trade of the Day: Advanced Micro Devices, Inc. (AMD) Aiming for $8 appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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