Advanced micro devices (AMD) – Get report and Xilinx (XLNX) – Get report were on the move Friday as a possible acquisition was underway.
Shares of Xilinx were up nearly 17% at one point on Friday upon news that AMD was working on a $ 30 billion withdrawal from the company. For its part, AMD stock was down about 4% on the news.
The news is coming fast and furious, with TheStreet’s Jim Cramer himself suggesting that Xilinx may not be interested in a purchase.
All of this comes after Nvidia’s (NVDA) – Get report recent announcement that it will acquire Arm Inc. in a $ 40 billion deal. Clearly both Nvidia and AMD are looking to spread their dominance and grow through M&A.
What do the news rankings think? Let’s watch.
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On Thursday, AMD stock reached resistance near $ 87.50. Seeing Friday’s rejection isn’t all that surprising, although the way she acts from here will be interesting.
For example, a slightly deeper decline places it in the 20 and 50 day moving averages. If the bulls are truly in control, they will buy the dip in this zone and put a new test of $ 87.50 into play.
If the stock manages to break out of $ 88, it puts into play a retest of the high at $ 94.28, along with the 261.8% extension to $ 95.71. On top of that, $ 100 is in play, followed by a three-fold range extension to $ 104.31.
If the 20 and 50 day moving averages fail as support, the $ 75 area could be in play. This zone was supported during last month’s retreat. A close below last month’s low of $ 73.85 would not be a positive development for AMD shares.
The stock opened north of $ 120 and rallied slightly before retiring. Doubts of the deal obviously don’t help matters. Not even the fact that the $ 120 to $ 125 area is a difficult area of possible resistance.
This zone formed resistance in the summer of 2019. It should be noted that despite its big rally in the summer of 2019, Xilinx has failed to close above $ 120.50 on a weekly basis even once. Additionally, the 161.8% extension from the March low to the February high comes into play near $ 124.
Despite this hurdle, the stock did a great job exiting its channel (blue lines) and above its previous July 2020 high of $ 111.76.
Down, I would like to see the July high as support. Below that and the $ 107.50 area must hold up otherwise the 20 and 50 day moving averages may be in play.