Advanced Micro Devices Part 3: Risk-Free Arbitrage Play or Possible Bullish Momentum?

AMD (Advanced Micro Devices) fell -3.33% in late hours trading today, due to Dell Quarterly revenues more less being stagnant and growth-less. With that being said we can see the sell off was related towards the psychological reaction to dell stock selling off (since AMD chips are in Dell produced computers) i expect this sell off to be more so news reactionary than fundamentally sound.

Based off the technicals above we can  see a few things.

• First off AMD could be a example of a Descending Bullish Wedge.
• CCI and DMI-/+ may suggest its bearish trend to be coming to a end soon, indicating towards now being a potential buy point. Mind you i buy in before mechanical's say go, because i appreciate getting on a train before it leaves the station lol.
• Parabolic SAR has been descending for a while, its about time for a mechanical turnaround.

Overall a reactionary behavioral response to a quick trending equity such as AMD is almost invariably going to have a pullback day. Today was it. The next few days should prove to be bullish....i would guess hitting 7$ a share in a few weeks wouldn't be to far'fetched of an idea.

Position: LONG to 7$-$7.20

S&P 500: The Short Play.

Well folks, look at the market the past week, were down 4% for the year easy. Now if you read my very first blog "Macro-economic analysis" you would have somewhat expected this to happen after the massive commodity bubble, that came to be/exists. So what can we expect in these times of serious uncertainty.

• S&P falls 147 points in the past two weeks.
• Standard an Poor's downgrades U.S treasury bonds/yields from AAA credit rating to AA credit rating.
• Weak economic growth reports produce fear.
• Investors/ Mangers/Funds loose faith in USD and U.S economy

 It mean its truly been a blood bath this past week. On top of that while everyone is expecting  this "correction" or "bearish run" to bounce off current levels, i tend to find that to be false optimistic bias. We have a growing number of unemployment claims, a failed FED monetary policy, awful global macro-economic issues occurring in Europe and at home, and top of this outrageously high commodity prices, destroying consumer purchasing power to re-invigorate aggregate demand.

Its simple, bond yields have been sky-rocketing in Europe and they will be sky-rocketing here in the U.S as well in time. When yields rise people become pessimistic on our countries financial strength, when that occurs we will see systemic paranoia, and fear induced panic in our financial markets, so expect an average downward trend of our major index's to continue.

Overall i suggest betting against the markets overall trend buy purchasing shares of ETF: SDS
We may see some periods of bullish investors buying up equities at a "discounted price" but that is simply a illusion created by mental accounting, and representative biases. In reality come Monday we should see a drop in the markets...your entire countries credit rating getting dropped on a Friday night cant be good...seems eerily similar to Washington Mutual's Fed seizure back in 2008. The weekend before it dissolved.

Expect serious market movement downwards Monday.


Position: SDS Long

Hyper Dynamics: Confirmed Bullish Upwards Trend!

So it appears proper due diligence has paid off.....score one for Inefficient Markets Theory this pas week....as i said on my previous blog... Tuesday would be the day of the HDY price take off....12% gain that day...and its been trending upwards since..

What we are witnessing is a combination of group dynamics....shorts covering their positions...and associated longs, jumping on the train as the engine is starting at the station.

Above we can see that a new upwards bullish trend has been established and is in the process of a continuation upwards. (Blue lines indicate bullish trend lines) This does not come as much of a surprise, based of the analysis of my previous articles.

Resistance was broken at 5.16 today....i found it amusing that whether the shorts or some other market player or power broker wanted to keep a lid on that price..and failed. I witnessed many big multi-hundred thousand share sell blocks get eaten through by bullish volume. This leads me to believe that the massive 20% short postion on HDY (with 4 days left to cover) are getting desperate in finding and exit from their trade. It seems to me some major institution is trying to force HDY down to a lower price to minimize their losses.

Overall the current situation is now obviously a new bull market for HDY. Here are some other points

• $5.45 is the next resistance point...if we can pierce that by Monday- or Tuesday......it should be easy to hit $5.90-to $6.15 a share.
• This is a short squeeze in process....as the price continues to climb acceleration of PPS will increase due to the squeeze.
• Volatility will increase due to the squeeze...so expect a constant battle between intra-day long and sell positions.
• Either way this new bullish trend has a ways to go.
• Last but not least...we can expect major upwards PPS movement after the NASI announcement due any day now.

All in all the trend has been confirmed...so lets sit back and watch the direction of the trend.....but being weary of noise traders jumping aboard the train...irrational exuberance is a reality in every bull run...one must know when to properly exit the trade and take profits!!!

Hyper Dynamics (HDY): Further Bullish Breakout Confirmation.

Mechanical trading system indicators blew up today...they show further upcoming bullish trend confirmation signals after the last two medium volume volatile trading days.

In the chart above we can see three things.

• The mechanical Parabolic SAR has recently turned bullish showing a upwards trend to be beginning in process.
• The +DI line of the Directional Movement Indicator is above the -DI line right when he Parabolic SAR is suggesting a new upward trend. 
• Candle Stick's are settling at resistance points instead of breaching support points on daily charting.

When Parabolic's change direction to bullish..with a confirming Direction Movement Positive line above the Directional Movement Negative line..this almost invariably is a ironclad confirmation of a bullish breakout since possible whipsaws from the Parabolic SAR  can be ignored. Coupled with the incredibly contracted BB bands its blatantly apparent we will see a breakout any day now...most likely Monday, Tuesday or Wednesday..but probably Tuesday.

All in all, the Bullish falling wedge continuation pattern is still in effect. To be quite frank, i have not seen so many indicator's and pattern's align themselves together to basically say long this security right now...i mean this is like the planetary alignment of Technical Analyisis Indicators...its amusing...

Regardless its apprarent short sellers and market makers are holding this stock down so they can have more time to sell to cover..or accumlate more shares at a discounted price over a duration of time to avoid loosing potential spread points of massive bullish buying energy...

All in all, the time to buy is now...the breakout will most likely be fierce and fast...im expecting the move to occur next week..but never underestimate the continuation of a battle between Bull's and Bear's it can last and long time.


Position: Ultra Long

Advanced Micro Devices Revisited: Oversold & Undervalued?

Yesterday Alex Guana an analyst at JP Morgan moreless bashed AMD saying its new fusion chipsets will have no competitive advanatge towards intel, and is moreless no longer a relevant company in the semi-conductor industry. Now his comments may have some merit, but they certainly are biased. Many mainstream desk-top building fans, as well as major companies such as HP typically purchase AMD chipsets due to their performance to price ratio. AMD sells semiconductors that are slightly less powerful than intel's but half the price...in this economy value is what consumers are looking for. Regardless of the constant banter back and forth over what manufactuer is better lets take a look at what the charts have to say.

Based off of technical analysis of AMD here are some points suggesting a trend reversal.

• The latest trading day has shown the candle stick to close below the lower bollinger band..when this occurs this almost invariably should be used as a entry postion and almost always signals a buy.
• The CCI indicator is at -293..lmao...when the CCI line crosses -100 its considered very overvalued......i can honestly say i have never seen CCI approach these low levels unless there is some sort of major event or crash.
• AMD has been in a downwards trend for many weeks now, it seems to gravitating towards a more so sideways trading range..or so i predict. (illustrated with pink trendlines i inserted on the chart) So we can expect to see less volatile price movement.

Overall i think the recent price slide, is the reaction of noise traders and investors towards Alex Guana's comments, as well as the associated slide in the tech sector this week. AMD is a major company and when funds and traders liquidate positions in mutual funds, etf's, or sector based portfolios, AMD being a major tech stock will take a hit on negative volume.

Conclusion? I think AMD is reaching at, or approaching a bottom, and i believe making and entry trade now would be a profitable stratgey.........i expect to see AMD approach $7.60-$8.20 per share in the next 3 or 4 weeks.

Position: Long

Hyperdynamics Corporation: Breakout To be?

While running analysis of a variety of equities Hyperdynamics Corp. (HDY) came up on my screener. I almost invariably prefer to analyze securities that are trading sideways for a period of a week or so. Allows me to look at the previous 3 month trend to allow me to evalute which direction the trend is going.

So far it appears that HDY is a textbook depiction of a Bullish Falling wedge continuation pattern.

• Contracted Bollinger bands mean a directional breakout is due.
• Light volume preceded by falling wedge with contracted bands shows the bullish falling wedge pattern is working itself out before breaking out.

Based of the chart, and my analysis of the technicals i would give HDY a long call, it appears a bullish breakout is will occur after this contraction expands.

Position: Ultra Long

Value Buy: Cumberland Pharmaceticals (CPIX)

Cumberland Pharmaceticals (CPIX) has shown itself to be a very attrative equity play based of criteria of my stock screeners. CPIX from a fundamental point of view is a tremendously under valued company, for the follwing reasons.

• P/E ratio of 1
• PEG ratio of .68
• Debt to capital ratio of 9.49% which is very low conisdering the sector this company is in.

CPIX is one of the most profitable companies in the Biotechnology & Drugs industry. Its gross margin is among the strongest of any peer while the operating and net margins are above the industry medians substantially. CPIX is has very little debt, with plenty of on hand equity to pay off all outstanding liabilities if needed. From a Technical Analysis perspective CPIX is very oversold on almost all indicators.  bollinger bands suggest CPIX is hugging the lower band, which is a indicator towards a uptrend in price movement to take place after this pull back is over. Moving averages suggest the stock is unvervalued and should be trading 9-15% higher than it is now.  CCI indicates its massivly undervalued. All stochastics point towards CPIX being oversold, as well as it having a breakout upwards here shortly. When all Technical & Fundamental indicators point towards any assest being oversold/undervalued its more often than not a price correction in the positive will occur. I would say based off of my analysis CPIX is due to increase in sahre value by 8% low side 15% high side within the next 3 weeks. I rate CPIX as a BUY. CPIX is a financially healthy bio-tech company with tremendous growth opportunity, coupled with due dillegence and its recent sell off, its at a discount and will most likely rise in value quite nicely in the comming weeks.