Can We Get the Next Move in AMD Right?

Here's our technical analysis and trading strategy.

In a Real Money column Wednesday, Jim Cramer recommended investors focus on individual semiconductor stocks, and stay away from ETF baskets. Some semiconductor names he favored included Qualcomm (QCOM) and Advanced Micro Devices (AMD) .  

I haven't looked at AMD in some time so let's check it out now. On Oct. 28 I was too bearish and recommended, "Despite the fundamental story, the charts of AMD suggest a fair amount of risk ahead. Take profits on longs and avoid the long side for now."

The shares dipped a little further into early November but never broke the September lows to start a downtrend (see the chart below). Prices zigzagged up to the October high and broke out higher earlier this month. 

In the daily bar chart of AMD, below, we can see that the shares have even broken out over the September highs. AMD is trading above the cresting 50-day moving average line and nicely above the rising 200-day moving average line. The trading volume has been steady and the On-Balance-Volume (OBV) line has inched upward the past two months but it has yet to make a new all-time high to confirm the price breakout.

The Moving Average Convergence Divergence (MACD) oscillator is pointed up and above the zero line but the two average lines are on top of each other. 

 

In the weekly bar chart of AMD, below, we can see an impressive three-year advance. Every pullback and dip to the rising 40-week moving average line has been a buying opportunity. Weekly trading volume has diminished recently and the OBV line was strong for a long time before turning sideways in recent weeks.

 

The MACD oscillator has just crossed to the upside for a new outright buy signal. 

 

 

In this Point and Figure chart of AMD, below, we used daily price data. Here we can see a recent upside breakout and a potential $114 price target.  

 

 

In this second Point and Figure chart of AMD, below, we used weekly price data and here a $125 price target is displayed.  

 

 

 

Bottom-line strategy: AMD is pointed up but I would like to try to buy it closer to $90 if possible and then risk below $85. Our targets would be the $114 to $125 area.

(AMD is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells this stock? Learn more now.)

Employees of TheStreet are prohibited from trading individual securities.