AMD "Cats and Dogs" trade (long)

The Cats and Dogs trade is more of a season and if you watch enough charts and different price ranges, eventually you might stumble on it too.

Typically the C&D season starts to come alive after a protracted rally in which a lot of people sat it out and they are seeing the gains and starting to feel they missed the move.

Since people are naturally bargain hunters, they don't want to go for the stocks that are $100 or more, they want something they can buy thousands of shares of. Typically the stocks are NASDAQ, many times they have easy to remember tickers like BOOM, AMD is also pretty easy to remember and they enter these trades that typically show up just as the bull run is approaching its end, it's actually one of the signals of a bull market dying when you have a lot of these trades popping up.

The trades are usually good for 1-day double digit gains of at least 10%, but often they make 30-50% and are top performers for the day. Sometime the move lasts a day, sometimes it lasts 3-4 days, but they are inherently short in duration and when they reverse, they reverse quick.

With QE3 just having been announced, there are probably a lot of traders who remember the golden days of POMO during QE, these traders likely went through the meat grinder of Feb-May this year with numerous head fake moves and probable decided to sit out or were forced to sit out the market, with the run since June 4 and QE3 announced, I'm willing to bet there are a lot of C&D trades out there and I'm going to run a scan to see.

Here's AMD...

AMD vs the SPX, AMD certainly fits the profile of a cheap stock and if you believe QE3 lifts all assets, then it doesn't matter too much what AMD looks like, although there is definitely something going on with AMD as I'll show you.

The yellow gap in this case actually looks like a break away gap even though it should be much higher in the trend, the orange gap is probably another break-away then there's an area of very clear resistance and the market had broken out 3 days earlier and was still moving up, AMD staged a beautiful head fake trade in the white box, longs paid the price for the downside momentum that appears to have finally forced capitulation at the white arrow -probably on some bad news.

The 4 hour chart shows the main primary trend from top to what may eventually be a bottom, I wouldn't call this anywhere near a true bottom yet as it would have a lot of lateral work to do.

All of these charts show distribution and then very fast and strong accumulation, meaning AMD was accumulated in size very quickly to show up on some of these intermediate time frames. We'll need to watch 3C carefully if you are in the trade, I suspect something is going on, some news maybe?

1 min leading positive

2 min relative negative , leading negative and leading positive

3 min relative negative and leading positive-all in the same flat area like I always mention.

 5 min relative negative, leading negative and lading positive, agin the accumulation in a nearly perfectly flat area. If you were in AMD during that time, you would be so bored and convinced the stock is going no where, in reality smart money was hard at work.

10 min leading negative and a leading positive.

There are even signs of accumulation on longer charts so the fact it is leading on such long charts in less than 2 days, tells me there was a rush to get the position in place. We'll see what it's all about, but I'd think the gap near $4 is a reasonable first target, we'll see how it performs in to higher prices (confirmation or distribution).