Technical analysis alert: AMD and Starbucks
By Antreas Themistokleous
27 April 2023
Despite a gloomy global outlook for 2023, traders are still seeing opportunities in the stock market, and two assets stand out with strong forecasting potential. Let’s see what’s driving the price actions and where they are going.
AMD looking healthy despite the expected decline in earnings
Shares in Advanced Micro Devices, Inc. (AMD) performed well in the first quarter of the year and managed to make gains of almost 30% on its share price. The company is expected to report its earnings for the fiscal quarter ending March 2023 on May 2, after market close. The consensus EPS is $0.42 (USD) compared to the result for the same quarter last year of $1.02.
With a current ratio (ability to repay the short-term liabilities with the current assets in possession) of over 200% and a strong balance sheet where assets outweigh the liabilities on a ratio of 3:1, the company is looking financially healthy. This is music to the ears of long-term investors even if the EPS is declining for now.
On the technical side, the price is trading in a slightly declining momentum in the last month, but is still in profit compared to the beginning of the quarter. Currently, AMD is trading on a very strong technical support area which consists of the 38.2% of the daily Fibonacci retracement level, the lower band of the Bollinger bands, and also just below the 50 SMA.
Although the short-term momentum is bearish, the overall trend is still bullish and this is also indicated by the 50 SMA still trading well above the 100 SMA. At the same time, the Stochastic oscillator is recording extreme oversold levels, further supporting the narrative of a continuation to the upside in the short to medium outlook.
Cracks forming on the bullish movement for Starbucks
Starbucks Corporation (SBUX) is trading at a profit of around 8%. The company’s earnings report for the fiscal quarter ending March 2023 is set to be released on May 2, after market close. The consensus EPS for the quarter is $0.64 compared to the same quarter last year of $0.69.
Insider share sell-offs by the chief financial officer and executive vice president totaled around $400,000 in February, (0.49% of total shares), reducing stake ownership in the coffee giant, but overall, insider holdings decreased by a relatively small proportion.
From the technical analysis perspective, the share has been consistently trading relatively well in the past 10 months with some technical indicators pointing to a possible correction in the short term.
The price is approaching the strong reaction area of $110, which was a resistance level in October and December of 2021, as well as in early February of 2023. Even though the overall trend is still bullish, there are some signs of weakness and possible correction to the downside in the coming sessions.
Firstly the Stochastic oscillator is in the extreme overbought area for the last 3 weeks and also the 50 SMA touching the 100 SMA is not giving any validation to the bullish narrative, indicating that a downward correction is a possible scenario in the short term. If this is confirmed we might see some major support around the $103.50 price area which is the crossing of the 2 SMAs and also the 23.6% of the daily Fibonacci retracement level.
As always, we recommend you access the Exness Terminal and open both charts in a tab on your browser. Keep a close eye on the price action to see if AMD continues to be bullish and SBUX makes a reversal. Alternatively, try the Exness Trade app and get notified when your favorite assets start moving and receive breaking financial news alerts on the go.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.
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