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:

Yum! Stock to Form a Base Near $75 a Share

The coronavirus selloff hit the restaurant industry hard. With stores closing to prevent the virus from spreading, the stocks of McDonald’s, Starbucks, Dunkin and the like all came crashing down. Yum! Brands wasn’t spared either. YUM stock has been losing ground since the summer of 2019, but it was the COVID-19 crisis that really scared…

Read More »

Intel ‘s Troubles Fit in its Elliott Wave Correction

2020 is shaping up as a year to forget for Intel shareholders. The stock is down over 20% year-to-date. First, the coronavirus selloff caused a 35% plunge down to less than $44 a share. And just when it seemed INTC was recovering, the company announced it will delay its 7nm products until late 2022 or…

Read More »

Expedia Stock can Surge as Travel Returns

The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before…

Read More »

Plus500 Confirms Uptrend, but Correction is Likely

Based in Haifa, Israel, Plus500 (LSE:PLUS) operates a leading CFD trading platform. The company is part of the FTSE 250 index and conducts most of its business in Europe and Australia. The new ESMA regulations which came in effect in August 2018 severely impacted the CFD trading industry. As a result, Plus500 stock fell from…

Read More »

Moody’s, a Buffett Darling, Trading in Late Fifth Wave

Moody’s Corp. has been a long-time holding in the Berkshire Hathaway portfolio. It is also the seventh biggest position in it as of the end of March 2020. The company has a strong competitive advantage, it is highly profitable and growing. No wonder Warren Buffett likes it so much. The stock did decline sharply in…

Read More »

Dollar General Stock Bulls are Looking for Trouble

As a general merchandise discount retailer, Dollar General was among the handful of businesses that actually benefited from the pandemic. People piled on necessities preparing for what looked like the end of the world for a while. As a result, sales at Dollar General surged in the midst of the crisis. While its stock price…

Read More »

Veeva Systems Stock Trades in Bubble Territory

It is true that the Fed’s recently re-adopted zero rate policy and stimulus are distorting financial markets. Interest rates are like gravity to financial assets. The lower the rate, the higher asset prices go and vice versa. As a result, stocks in general tend to ignore the economic reality right now. Among the companies trading…

Read More »

More analyses