Tempted by this week’s move in AMD?

AMD - W - 3 May 2013

AMD moved higher by more than 10% this week after bouncing off a multiyear low.  John from Huntington Beach, CA asked if it looked like a good buy.  We showed this chart to several people and asked what they thought about the stock.  Almost to a person (11 of 13) people were interested in the stock as a long play.  Reasons varied from “a cheap way to play tech” to “a cheap alternative way to play chips vs INTC” to “I can buy a lot more of it at this price and it’s moving higher.”

To be sure this could absolutely be the turn in AMD… however, consider the broader market has done nothing but go higher for the last couple of years while AMD has trended lower… not good as these things go.  Further, as the arrows indicate, we have seen these big weekly jumps in AMD on more than one occasion.  The stock generally runs up to resistance and reverses.  Absent proof (and confirmation) to the contrary, there is no reason to believe this time will be any different.  Thus, we would avoid the long side in this stock for the time being.

But that’s just one trader’s opinion.