AMD Bankruptcy or Bounce?

[michaelscott]

Here is the chart. That nasty head and shoulders says it all. AMD has a chance of going to 0 and heading into bankruptcy. Everyone has been dumping this stock like yesterday's news when looking at the OB Vol and A/D line.

There is a weak gap back in 2004 that has been filled and is acting as a support, but then there is another support at 10 and some change. The only other support resides in the 1990s and during 2003. When I have to look that far back for support, I wonder if bankruptcy is a possibility. There has to be something so wrong in the wings when I have to start looking at charts from the 90s to find support and when the A/D line falls into the abyss.

AMD did do a double bottom in the last two days. So I can only conclude that either AMD is a strong buy right now and it will bounce or its going to head lower and into bankruptcy.

Im going to push my chips into the bounce trade. Setting my stop at 12.90. 12.90, no further.

Bankruptcy or bounce?

 

[trader225]

It can come down some more.
But not $0.00, because they do have assets that are worth something.

 

[mschey]

I would be a buyer at 13.45 on a stop, risking a new low close. Right now, I think you are just bottom fishing, a very low probability trade, IMO. Good luck! At least you have a tight stop on this one.

 

[romik]

$1m question is - where do you see next support? $12.90 or ~$10.50?

 

[trader225]

Between 9 & 10 $. My guess 9.45.

 

[showyouwang]

if thats H&S pattern you can expect much more room to go down, possibly as low as $3...

 

[number22]

If AMD goes under $7; which is likely scenario of fear for Bankruptcy. Just sold more put options then.

Love to own it anyway.

 

[romik]

Why all the talk of bankruptcy?

 

[ByLoSellHi]

Quote from romik:

Why all the talk of bankruptcy?

AMD has liquidity issues along with a nasty looking balance sheet, and both will probably deepen soon.

Intel has a huge upper hand going forward: They can give away chips to win market share, if they so chose, because they have so much cash on hand.

 

[romik]

Just a quick Google here: at the end of 2006 AMD had 25% market share, right now INTC's MC is 15 x AMD's! I do not understand FA, but for a company that has 25% market share to be worth 15 x less than its direct competitor sounds odd. Is that down to analysts expecting 25% to decline dramatically? Because if that's the case, then it's hardly a call for bankruptcy, unless you are right about liquidity issues, which as I said I do not fully understand how to interpret.