Trader Mike

I just saw the news about Dell beginning to use AMD processors. It reminded me of the post I made back in October 2005 about an AMD/Intel pairs trade. Someone asked me about (gasp!) shorting AMD and going long INTC. I said I’d reverse that. Some Intel bulls chimed in talking about how Intel was historically cheap, etc. Case in point:

in the 15 yrs that I’ve been following Intel, any time it trades at a sub-20 PE, you can make money off the stock over a 6 to 12 month time frame. Intel now trades less than 19 times earnings.

The stock now sits at the bottom …

Fellow blogger Hakan writes:

You reviewed AMD for Phil on December 2, 2005. I was wondering if you could take a look at the chart and comment on it if you have time? Do you think it is time for a pullback?

Yes, I do think it’s time for a pullback in AMD. The stock has been walking up its upper Bollinger Band for almost a month now. Yesterday’s high-volume reversal candle is a good warning, IMHO. I hate to sound like a broken record but I feel pretty much the same about AMD now as I did back in early December — I’d hang on if I was already long and if I wanted in I’d …

Phil writes:

Any chance of an AMD chart going forward. Some people have said a cup & handle have formed, could you check it out please ?

It looks like about a year-long cup & handle to me. I still like AMD but since I’m not a breakout trader I wouldn’t be buying it right here. If I was already in it I’d certainly be hanging on. Here are the weekly and daily charts:

Long Intel and Short AMD? Not for me, I’ll take the other side(s) of that trade.