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Apple Has A New Buy Point; AMD’s 2 Investing Lessons; S&P 500 Futures | Stock News & Stock Market Analysis

Futures for the S&P 500, Nasdaq 100 and Dow industrials were little changed late Tuesday. Apple (AAPL) now has a new, lower buy point. Meanwhile, Advanced Micro Devices (AMD), a rival to Nvidia (NVDA) and Intel (INTC), tumbled late despite beating Q3 estimates after closing just shy of a buy point.

XAutoplay: On | OffAMD’s tumble underscores two important lessons. First, always wait for a stock to clear a proper buy point. Second, you generally should look to buy the leaders in a particular field, such as Nvidia, rather than an also-ran.

S&P 500 index and Nasdaq 100 futures fell 0.1% vs. fair value. Dow futures were flat.

During Tuesday’s regular session, the Dow industrials powered ahead on strong earnings from 3M (MMM) and Caterpillar (CAT). The S&P 500 index and Nasdaq composite advanced 0.2%.

Apple

Apple, another Dow component, rose 0.6% to 157.10 in Tuesday’s stock market trading. But the iPhone giant’s stock now has etched a proper handle in its shallow cup base, reaching the minimum five days. That gives Apple a new buy point of 160.97 vs. its prior potential entry of 165.04. Of course, Apple is still facing resistance at its 50-day moving average.


IBD’S TAKE: Apple reports earnings on Nov. 2. Buying or holding a stock heading into earnings can be risky. Investors doing so may want to consider an earnings options strategy that offers a chance to cash in on the upside while minimizing potential losses.


AMD Beats, Stock Gets Beating

AMD earned 10 cents a share excluding various items, up 133% vs. a year earlier. Revenue climbed 25% to $1.64 billion, its third straight quarter of accelerating growth. Analysts had expected EPS of 8 cents on sales of $1.51 billion. AMD sees Q4 revenue of $1.34 billion to $1.44 billion vs. views for $1.322 billion. But that’s also a 15% sequential decline.

AMD shares, which briefly rose to around 13.70 in late trading, crashed nearly 12% to 12.57, suggesting moves below its 50-day and 200-day moving averages. AMD had closed up 1.1% to 14.25 in Tuesday’s stock market trading, ending just below a 14.51 cup-with-handle entry.

Why The Buy Point Matters

An overeager investor might have been tempted to cheat, heading into earnings. The justification is that you get a lower price and stroke your ego about how you were smarter or braver than other investors. But saving a few cents, or even a few percentage points, isn’t worth the risk.

The buy point is a key technical level, maximizing your odds of significant near-term gains while limiting the risk of losses and offering signals for cutting losses short. When a stock clears a bullish entry point in heavy volume, almost every current shareholder should be happy. Mutual funds and other institutional buys must bid up the price to acquire shares. If a breakout falters, and drops below the buy point, that’s a clear sign that something is wrong.

Barring a big turnaround in Wednesday’s session, AMD is not going to trigger that 14.51 buy point. Patient investors avoid a big loss by never taking a position.

For investors who felt compelled to buy a stock early, they may want to try options to hedge their risks. IBD’s Earnings Preview column covers this options strategy with specific examples.

AMD actually made a similar point after its Q2 report on July 25. The next day, shares popped as high as 15.65, exactly hitting a buy point. But AMD closed in the bottom half of its range and then sold off over the next several weeks. Except for that momentary trade at 15.65, AMD didn’t offer a buying opportunity.

Buy The Leader, Not The Laggard

You get what you pay for.

AMD has long been a distant No. 2 to Intel in PC chips, and competes against the larger rival in server chips as well. AMD also takes on Nvidia in graphics chips, with both taking advantage of such chips being used for artificial intelligence and Bitcoin mining.

But while AMD has had some recent success in terms of financials and stock performance, it’s still a big laggard next to Nvidia, which delivered 56% sales growth in its latest quarter, on top of tough comparisons.

AMD historically has struggled to maintain profitability, even on an adjusted basis, with sales often slumping as well.

Nvidia shares fell a fraction in late trading after closing about 1% higher to 198.68. Nvidia is extended from a 174.66 buy point cleared last month.

Intel was not moving in late trading. Shares climbed 0.3% to close at 40.95, hitting their highest level in nearly 17 years. Intel, which reports Q3 results on Thursday, is extended from a 38.55 buy point.

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