Advanced Micro Devices Inc (AMD)

[JLS]

The Shadow Knows

Daily candles with very long shadows on all major market indices after a significant multi-day trend downwards will have a closing price that very likely defines a trading bottom for the whole market on that day, or within the next few days (at nearly the same price). In other words, that day is a good day to go long before the market closes, and don't expect a better entry on following days.

So, if this day is tending to end that way, then this day marks a short-term trading bottom for the majority of the market.

For me, that means that I will continue to hang onto my AMD shares, as they should rise in value for at least a few days after that bottom, then I'll sell weekly Calls against those shares at a strike just above (or maybe below) that day's trade. For instance, if AMD makes it back up to trading just below $24 (closing at $23.71, where there is overhead resistance), then I might decide to sell $23 weekly Calls.

Since AMD broke higher out of its triangle several days ago (then fell back in), it's likely to break out again in the same direction and very soon if what I wrote above comes true, and I would at least expect it to re-test its SMA(50), as it did several days ago, and that is when I would sell weekly CCs (and very possibly use a strike at or below current trade on that day because I would expect it to trade flat or lower in the following days). The only thing that would change this plan would be if $SPX also decided to break higher out of its descending triangle, then I would be more bold in my choices.