Is AMD Stock Bound For More Near-Term Pain? Advanced Micro Devices, Inc. (NASDAQ:AMD)

Advanced Micro Devices, Inc. (NASDAQ:AMD) stock continues to struggle. Is a bottom in sight for AMD stock?

Is AMD Stock Bound For More Near Term Pain Advanced Micro Devices, Inc (NASDAQ AMD)
Flickr

Shares of semiconductor company Advanced Micro Devices, Inc. (NASDAQ:AMD) saw another dip in yesterday's trade, losing more than 2.5% of their value. After the initial post earning rise, there has largely been a downward trend in AMD stock. Now, AMD stock has fallen to a 1 month low and is down by more than 13% in that timeframe. There has been a lot of positive news lately for AMD but that has not helped much to reverse the trend. The medium-term outlook for AMD stock looks promising, buoyed by new product launches and the acceptance of its recently launched products. However, the stock seems to have been caught in a downtrend and volatility, which has been synonymous with the stock, has made things more frustrating for investors. Now, the question is whether AMD stock is in for more near-term pressure? Or is a bottom is in sight? Let's take a closer look.
AMD stock chart

What do the charts say about AMD stock?

After the slump at the beginning of August, AMD stock did make a slight recovery by the end of the second week of August. However, the stock couldn't sustain this recovery. Overall, the stock seems to be caught in a downtrend. The recent correction has also pushed the stock to breach key support levels along the way. AMD stock presently trades below the key Simple Moving Averages (SMAs) of 20-day, 50-day and 100-day. Even the Moving Average Convergence Divergence (MAC) indicator has trended downwards throughout the last one month suggesting there's strong downward momentum. Yesterday's fall has brought the AMD share price very close to its long-term support level of the 200-day SMA. The 200-day SMA has acted as a strong support level for the stock over the last 17 months. AMD stock had previously rebounded from the 200-day SMA after testing it, following the massive post earnings crash. The 200-day SMA stands at 11.97, just a few cents away from AMD stock's last close of $12.05. Given the past trends, AMD stock is likely to rebound from here. However, a breach of this crucial long-term support level could spell further near-term pain for the stock.

AMD technical daily chart

Further, AMD stock may soon hit the bottom. After the last trading session, the stock has entered oversold territory as per the Relative Strength Index (RSI) indicator. The present RSI measure of the stock is 29.95, just below the commonly used oversold threshold of 30. However, the Bollinger Band indicator does not flash an oversold signal yet. The share price is close to the lower Bollinger Band but is yet to breach it to flash an oversold signal. The combination of the above two popular momentum indicators is generally considered as a strong signal. However, the above events suggest AMD stock may be nearing a bottom and a rebound may be around the corner.AMD Technical chart

AMD in the news.

AMD with its Ryzen CPUs has been able to challenge Intel's (NASDAQ:INTC) CPU products. A lot has been said about the Chipzilla's response to AMD's Ryzen. Yesterday, Intel officially launched its 8th Generation Kaby Lake CPUs with mentions of 14nm Coffee Lake and 10nm Cannonlake CPUs as 8th generation processors too. Though the actual performance tests and comparison tests with the Ryzen counterparts are yet to be out, some reports suggest that the company's internal testing indicates the latest chips are capable of a 40-percent increase over their predecessor as far as performance goes. However, we must wait for the extensive test results to know whether Intel has a strong reply to Ryzen. For more details, readers can go through our recent coverage to know what could be the impact on Intel due to AMD's onslaught.

In another recent piece of news, David Wong of Wells Fargo has something positive to say about AMD. He expects the next set of chips for laptops from AMD and Intel to boost PC sales in the second half of the year. Wong expects that in the next three months, AMD might come up with its Ryzen notebook processors which could give a boost to the stock.

Summary.

Investors would be better advised to closely follow the charts to get into AMD stock near the bottom and ride the next upward wave. The technicals do suggest a bottom is in sight and a rebound might be around the corner. Investors must keep a close eye on the support from 200-day SMA which the stock currently enjoys. All in all, AMD shares could soon resume their uptrend, as the near-term pressure seems to be weakening.

Looking for fundamentally better and less volatile tech stocks than AMD? Check out Amigobulls' top stock picks from the tech sector, which have beaten the NASDAQ by nearly 140%. Interested in automotive stock? Then, we also have our top picks from the auto sector, which have beaten the S&P 500 by over 238%. If you're a trader though, you should check out our daily trading ideas section for daily, free updates on the latest crossovers and other popular technical signals.


Sreekanth Anasa Sreekanth Anasa   on Amigobulls :

Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice.

Buying and selling of securities carries the risk of monetary losses.Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions.

Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

show more

Comments on this article and AMD stock

Do share this awesome post