Advanced Micro Devices Could Drop Another 40%

Advanced Micro Devices, Inc. (AMD) got pummeled in September and October, giving up more than half of the 25-point rally that started from a 52-week low in April. The bounce into December raised hopes that the carnage had come to an end, but the stock turned tail when it filled the October gap and is now trading less than two points above October's low. More importantly, price action looks like a classic waterfall pattern that typically precedes an intermediate breakdown.However, the decline isn't as bearish as it looks because the stock has posted gains in excess of 70% so far in 2018, after starting the year around $10.00. Compare this superior performance to other issues in your trading and investment accounts, and be thankful that things aren't worse. Of course, that's no consolation for bagholders who took exposure in the $30s, now licking their wounds on the sidelines or still positioned in large losses. The stock posted an 11-year low at a split-adjusted $1.82 in 1990 and turned higher, grinding out a volatile uptrend that carved many steep pullbacks into the 1997 top in the mid-$20s. It fell into the single digits one year later and then bounced into a momentum-fueled advance, posting an all-time high at $48.50 at the turn of the millennium. The subsequent decline unfolded in three brutal selling waves that gave up nearly all gains posted in the 1990s. Renewed optimism in tech-land established a new uptrend in 2003, setting the stage for solid gains that persisted into the 2007 test of the 2000 high. Buying pressure fizzled out about six points under the prior peak, giving way to a downtrend that exceeded the ferocity of the 2000 into 2002 decline. Selling pressure finally eased in November 2008 after the stock undercut the 1990 low by 20 cents, posting a horrific 29-year low.