Advanced Micro Devices Inc. (AMD) was reviewed just last week, on Oct. 16. At the time I wrote, "The big question is whether AMD has corrected this year's rally. Is this the time and place to return to the long side? Prices have corrected about one-third of the rally, so the answer is a definite 'maybe.' I want to see some further testing of the $26-$24 area before recommending a long position." With prices indicated to open around $24 or so it looks like the correction is not over and further declines are likely. Let's check the charts again this morning.
In this daily bar chart of AMD, below, we can see that our favorite gang of indicators is still bearish. Prices have made a new low for the move down since our last inspection. AMD is still below the 50-day moving average line. The daily On-Balance-Volume (OBV) line is pointed lower and tells us that sellers of AMD have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator is in sell territory below the zero line now.
In this weekly bar chart of AMD, below, we can see that while prices are still above the rising 40-week moving average line the other indicators are bearish. The weekly OBV line remains in a decline and suggests that sellers of AMD have been more aggressive. The MACD oscillator is about to cross to the downside for a take-profits sell signal or a sell in a longer-term uptrend.
In this updated Point and Figure chart of AMD, below, we can see a bearish downside price projection for the $20-$19 area, or what might be support.
Bottom line strategy: Be prepared for further weakness in AMD. The next stop is likely the $20-$19 area.