Advanced Micro Devices, Inc. shares entered 2017 on a high note, ascending through the final stage of a strong uptrend that posted nearly 300% gains. The stock stalled above $15.50 just two months later, spending the rest of the year disappointing shareholders who expected AMD to keep pace with much larger rival NVIDIA Corporation . Even worse, price action has settled into an annual loss, raising the odds that end-of-year tax selling pressure will take control in the coming weeks.
The stock has traded in a relatively narrow range since dropping to $9.85 in May, carving a rectangle pattern that could signal a long-term top or just profit taking ahead of higher 2018 prices. Unfortunately for beaten-down bulls, bears hold a sizable advantage because accumulation-distribution readings have fallen to their lowest levels since February, signaling a slow but persistent capitulation by institutions and the retail crowd.
In addition, the chipmaker broke 200-day exponential moving average (EMA) support in October and failed a November test to remount that level, reinforcing new resistance at $12. Continued failure to trade above that critical level is likely to attract a large population of short sellers expecting the stock to break 2017 support and descend through the single digits. Given the threat, market players sitting on long positions should consider relatively tight stops to guard against major losses. (See also: Morgan Stanley: AMD Cryptocurrency Chip Market to Drop by 50%.)
Advanced Micro Devices is trading in the red for 2017 despite the strongest chip rally in years and could break down in the coming weeks. …read more
Read more here: AMD Stock May Be Headed for Single Digits
Category: AMD, NVDA