The story: Advanced Micro Devices Inc (AMD) has been getting crushed since reporting disappointing guidance in October 2017. Although AMD beat Wall Street estimates, its 35% gross profit margin forecast for the fourth quarter was below some analyst estimates, and the stock plummeted as a result. AMD shares have continued lower, but the stock has yet to find support and create a new base.

The details: On the daily chart of AMD, the shorter-term moving average is crossing below longer-term moving-average lines. This is a bearish signal, and AMD looks like it has a lot of room lower.

AMD

The death cross is signaling that AMD could fall to $10, the stock’s next area of support. However, one could argue that AMD is just pulling back before it continues higher. The stock was up nearly 300% in 2016, and it’s up over 50% in the last 12 months.

How I’m playing it: Based on the charts and the room to fall, I’m not buying AMD just yet. Instead, I’ll wait for AMD to form a bottom and find some support, followed by a bullish pattern, such as a rounded bottom on the hourly chart, with the shorter-term moving averages crossing back above longer-term averages.

#-#-#

Petra Hess runs PetraPicks.com. She is a technical swing trader and long-term investor in domestic and Canadian stocks and ETFs. At the time this article was published on RagingBull.com, she had no positions, options or open orders in ADM.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

Learn More

Leave your comment

Related Articles: