AMD Stock: Indicators Are Now in Bullish Alignment
My bullish views on semiconductor stocks, specifically Advanced Micro Devices, Inc. (NASDAQ: AMD) stock, have not been a secret, and in my publications surrounding Advanced Micro Devices stock, I continue to point to $24.50 as a potential price objective. Even when selling pressure pushed AMD stock lower by 27.73% in May of this year, I stood fast on my conviction and outlined developments that supported my bullish view.
I am focusing on this investment once again because I have exciting news to share. The method of investment analysis I use to generate my views is suggesting that AMD stock is on the verge of a price advance. This would result in the generation of a new 52-week high, which would then put my price objective of $24.50 within reach.
Before I delve into my findings, it is worth noting that my views on Advanced Micro Devices stock have been generated using technical analysis. This method of investment analysis is predicated on using historical price and volume data, found on a company’s stock chart, to forecast the next direction the stock price is likely to take.
The following Advanced Micro Devices stock chart illustrates a number of developments that are suggesting that AMD stock is all set to stage a price advance.
Chart courtesy of StockCharts.com
This stock chart has been modified in order to highlight a number of indicators that are suggesting that a bullish view on AMD stock is warranted.
The first indication comes in the form of bullish price action. This price chart has highlighted an alternating wave structure that has been instrumental in supporting the bullish move towards higher stock prices that began in February 2016.
This alternating wave structure consists of impulse waves, which are highlighted in green, and consolidation waves, which are highlighted in purple. These waves feed off each other in order to create a sustainable bullish trend, and the price action on the stock chart above is a prime example of this dynamic in action.
Impulse waves define the stage in a bullish trend when the stock price stages an advance and tacks on gains. Consolidation waves define the stage in a bullish trend where any overbought conditions that were created in the pursuit of higher stock prices are alleviated. A consolidation wave creates the necessary conditions so a new impulse wave can develop.
At this current juncture, the completion of the consolidation wave that is in development would suggest that a new impulse wave is set to follow and, therefore, higher Advanced Micro Devices stock prices are likely on the horizon.
This bullish scenario is currently being supported by the second indication, which is the moving average convergence/divergence (MACD) indicator located in the lower panel. MACD is a trend-following momentum indicator that distinguishes between bullish and bearish momentum using the crossing of a signal line.
The MACD indicator has been exceptional at confirming which wave is in development. A bullish MACD cross has correctly suggested that an impulse wave was in development, while a bearish MACD cross has correctly suggested that a consolidation wave was in development.
The bullish cross that was just generated in July is suggesting that bullish momentum is once again influencing the stock price, and that, therefore, Advanced Micro Devices stock is geared towards higher prices. This suggests that the stock price will exit the consolidation wave in an upward direction and a new advancing impulse wave will follow.
This bullish outlook will put my price objective of $24.50, which is highlighted on the following Advanced Micro Devices Stock chart, within reach.
Chart courtesy of StockCharts.com
The price chart is used to illustrate that a method known as a parabolic extension can be used to project a price objective. The assumption under this method is that impulse waves have a tendency to mirror each other and, therefore, the length of the initial impulse wave is used to project the length of the impulse waves that follows. The length of this initial impulse wave is measured using a log-based chart, which is then duplicated in order to create the $24.50 price objective.
Once AMD stock started trading north of $12.50, which was the previous price objective, I started using the parabolic extension. The new impulse wave that is set to develop has the potential to hit this marker.
Bottom Line on AMD Stock
Advanced Micro Devices stock is on the verge of staging a price advance. This bullish price movement is being suggested and reinforced by a number of technical indications. This advance has potential; AMD stock could tag the price objective of $24.50, which was produced using a parabolic extension.