close icon

AMD Stock Confirms Bearish Reversal

A month and a half ago, on September 11th, AMD stock was hovering around $30 a share following a spectacular 190% rally in 2018. Optimism was running high, but knowing that semiconductors is an extremely cyclical industry, we thought it was time to “be careful”.

Of course, the stock did not start declining immediately after our warning. Two days later, it added another 13% to reach $34.14 a share on September 13th. It wasn’t Friday, but that day still brought bad luck to AMD stock investors. It marked the beginning of a 30.8% drop culminating on October 19th. And if losing almost a third of its market cap in less than 40 days wasn’t bad enough, the Elliott Wave structure of this pullback suggests more pain lies ahead. Take a look.
AMD stock Elliott Wave forecast
The weakness from $34.14 has formed a textbook five-wave impulse pattern, labeled 1-2-3-4-5. In addition, two sub-degrees of trend are visible within wave 3.

For those new to Elliott Wave theory, impulses develop in the direction of the larger trend. Spotting an impulse to the south means that once the corresponding three-wave recovery in wave (2/B) is over, another five-wave sequence can be expected. Wave (3/C) down has the potential to drag AMD stock even lower.

But first we should get ready for a corrective rally in wave (2/B) to roughly $30 a share. The short-term positive outlook receives further support by the MACD indicator, which shows a bullish divergence between waves 3 and 5 of (1/A).

In our opinion, wave (2/B) is going to give investors a chance to evacuate before the bears drag AMD stock to $20 or lower in the (3/C). The fact that other semiconductor companies such as Nvidia and Micron are also retreating after prolonged rallies suggests that maybe the tide is turning for the entire industry.

It’s only when the tide goes out that you discover who’s been swimming naked” -Warren Buffett

Did you like this analysis? Our Elliott Wave Video Course can teach you how to uncover similar opportunities yourself!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Can Facebook ‘s Privacy Concerns Fulfill this Setup?

Facebook ‘s privacy policies are under the microscope once again. Personal e-mails uncovered during an FTC investigation reveal Mark Zuckerberg knew of the company’s problematic privacy practices. Facebook stock still hasn’t been able to fully recover from the crash in the second half of 2018, which dragged the price from $218.62 down to $123.02. How…

Read More »

JPMorgan: Risk is High After 10 Years of Bull Market

Between March 2000 and March 2009, JPMorgan Chase & Co. investors saw their holdings’ value decline by almost 78% as the stock fell from over $67 to less than $15 a share. The next ten years, on the other hand, have been a wonder to behold. JPM stock rose like a phoenix from its ashes,…

Read More »

SERV Stock Sets the Stage for a 40% Tumble

ServiceMaster Global Holdings, founded in 1929, is a cleaning and pest control company headquartered in Memphis, Tennessee. The company went public in 2014 and has delivered very generous returns for its shareholders since. SERV stock took off from $11.54 in August 2014 and climbed to as high as $56.50 earlier this month. A 390% total…

Read More »

IAC Stock ‘s Future May Not Resemble its Past

InterActiveCorp. or IAC for short, is a $19 billion media and internet services company. It is the controlling shareholder of Match Group, which in turn operates Tinder – the online dating app. IAC stock was beaten down heavily during the Financial Crisis. In March 2009, IAC stock fell to $13.23 a share, down 92.3% from…

Read More »

Humana Stock Bulls Haven’t Lost the Battle Yet

Humana (NYSE:HUM) climbed to an all-time high of $356 in early November 2018, following a rally from as low as $18.57 in March 2009. In less than ten years, the company rewarded the patience of its investors with a total return of over 1820%, not counting dividends. Unfortunately, the last six months were nothing like…

Read More »

T Rowe Price Vulnerable After Fibonacci Encounter

Founded in 1937 and based in Baltimore, Maryland, T Rowe Price is one of the largest asset management companies in the world. At the end of Q1 2019 its assets under management stood at $1.11T. That is T for trillion. Besides, T Rowe Price is also a public company which is why it is of…

Read More »

Momo Inc. – The Tinder of China Looks Promising

Based in Beijing, China, Momo Inc. operates a mobile-based social and entertainment platform. The company was founded in 2011 and became public in late-2014. The Tinder of China, as Momo is often referred to, first turned a profit in 2015 and has been enjoying strong earnings and revenue growth in the last three years. Momo…

Read More »

More analyses