Aligning All Key Technical Indicators On Your Side

I can look at nearly any stock and come up with a quick reason why I should buy it or short it.

But it's much more important to find MULTIPLE reasons to support your position. Advanced Micro Devices (AMD) is a leading stock in the semiconductor space ($DJUSSC) and buying just about any stock in semiconductors has made sense in 2023. Right now, however, I can make several arguments why I might want to sell AMD. There are a couple of obvious reasons to want to sell AMD, but let's first take a look at what the chart's telling us:

Enter Advanced Micro Devices, Inc. (AMD):

The most glaring technical reason to sell right now would be the negative divergence that printed just as AMD was setting new recent price highs. Let's also throw in the bearish engulfing candle from Tuesday. AMD easily gapped above the Monday price high, only to see a ton of intraday selling and a close well below Monday's intraday low. Reversing candles like bearish engulfing candles, combined with a nasty negative divergence, is usually enough evidence to convince traders to steer clear of the stock. But there's one more key factor that must be taken into account. It's monthly options expiration this week and AMD is subject, potentially, to a big drop based on a max pain level closer to 100. We discussed this at length on Monday evening as we had our monthly Max Pain event. I don't know where AMD winds up later this week, or even into next week, but I can honestly say this is not a stock I'd buy right now. There's simply too much risk.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.