Is AMD A Top Idea For 2019? This Chart Is Saying 'Wait Before You Buy'

Summary:

• Advanced Micro Devices, Inc. AMD traded 3 percent higher on Tuesday morning, after a financial analyst identified it as one of the top investment ideas for next year.
• This might be correct however based on its market cycles, we believe that patience will pay off in building a position.
• The stock pulled back to trade about 1 percent higher in the early afternoon.

Advanced Micro Devices Stock Weekly Chart

Cowen equity analyst Matthew Ramsay named AMD as one of his top ideas for 2019. He highlighted the change in semiconductor standards from 10 nanometer nodes to 7 nanometers. While this will benefit the sector as a whole, Ramsay expects AMD to be a first mover.

This of course came a day after Keybank said that the semiconductor sector was “staring into a black hole” due to a combination of weak demand and too much supply. The Semiconductor Sector ETF (SMH) is down 8 percent on the year.

In analyzing the market cycles for AMD, we think it is possible it has peaked for this cycle and is consolidating. We believe the stock will transition into a declining phase into February 2019, as this cycle closes. Cowen might be right, but we think patience will pay off before buying this one.

Related Links:

KeyBanc Sees 'Significant Runway' For AMD In Cloud Data Processors

Jim Cramer Weighs In On Cisco, General Electric And More