As the post below noted, semiconductor stocks are strong today. Digging into the sector shows a couple of interesting developments at Advanced Micro Devices, Inc. (AMD). For starters, the stock is up more than 7% today, making it one of the better performing names. However, a look the intraday chart below shows that buyers have been nibbling on this stock for the last few days.

Chart Courtesy of Thomson Financial

This 15 minute intraday charts shows the action for the last five days. What stood out to me was the very steady buying we have seen. Of course, those that have already been watching this stock may be quick to point out that the stock is coming off a new annual low. But more on that in a minute, as I first want to touch on the short interest.

As the graph to the right shows, short interest has been increasing for some time. Data collected by our Quantified Analysis group shows this is at relatively high levels at 18% of the stock's float. What I am wondering here is if the shorts have decided to take profits and unwind their positions.

With that in mind, let's shift the focus back to the daily chart. Here we see chart resistance near 6 but there is a headwind to note before that. With today's rally, the stock is flirting with a short-term overbought condition and pushing into its peak front-month call strike. As discussed in our Education Section, heavy call open interest can act as resistance so this will give us a good clue as to how strong the underlying buying demand is.

At this point I think it is still too early to tell whether this is a dead cat bounce or an end to the selling. If this is just a short-term bounce, I would expect the combination of call open interest, chart resistance, and overbought readings to slow the ascent here.

Chart Courtesy of Thomson Financial