(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

The rotation out of chipmakers continued again on December 4, after a sharp sell-off that started on December 1. The stocks of Advanced Micro Devices Inc. (AMD), Nvidia Corp. (NVDA) and Micron Technology Inc. (MU) continued to get hammered, sliding over 4.75 percent in late trading Monday.

Over the last five trading days, the three stocks have all been crushed, falling from 13 to 16 percent. The trading action in the stocks isn't encouraging using technical analysis. Each stock has failed to hold meaningful support levels, and the declines have come on a surge in trading volume.

As we previously noted in an Investopedia article on December 1, the bottom may not have occurred yet. (See more: Nvidia, Micron, and Lam May Not Have Bottomed Yet.)

MU Price Chart

MU Price data by YCharts

Micron Breaks Deal Price

Shares of Micron failed to hold the deal price from its secondary offering on October 11, when the stock was priced at $41. Micron traded as low as $39 in early trading on December 4. And when the stock tried to make a midday recovery, it failed to rally higher than $41.

Micron stock closed December 4 at $39.90, which is around support of $40. That's a decline of about 5 percent, suggesting another leg lower could be coming for Micron's stock, with no support until potentially $36.50, which is an additional 10 percent lower. (See: Micron Shares Could Rally After Stock Offering,)

 

 

Nvidia In Trouble

Nvidia appears to be in trouble now, as it has fallen easily through support at $195, and closed at $186.60 on Monday, down about 5.5 percent.

What had been technical support at $191.40 has now become technical resistance, as the stock failed two times during trading on December 4 to rise through the resistance level. There's concern the shares could have further room to fall, with the next area of support at around $182. 

 

 

AMD's Big Breakdown

Advance Micro Devices held support around $10.70 on December 1, but broke down on December 4, falling to the next support level at $9.75.

If the stock fails to stay above $9.75, it could be in for a drop below $8. That's a decline of nearly 22 percent to $7.85, which would be a sharp fall from what had appeared to be a positive setup in the stock in mid-November. (See also: AMD May Have Bottomed and Is Getting Set to Rise.)

 

 

When markets and stocks are moving quickly, it is often not easy to call or catch the bottom. These three stocks surely had their ups and downs in 2017, but the recent move lower has been devastating. It isn't clear at this point that a bottom has occurred based on chart analysis. And that is not a good sign. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

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