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

Fundamentals aside, the stock chart for Advanced Micro Devices Inc. (AMD) is pretty bullish. The chart is showing indications that the stock could be setting up for a break higher in the intermediate term, toward $18. That would represent an increase of nearly 50 percent from current levels.  

Forget Fundamentals?

From a fundamental standpoint, we have argued on numerous occasions that shares of AMD are not cheap and are potentially overvalued. We recently discussed how the company needs to see a surge in revenue if the stock is to rise substantially over the long run and hit $20. (See: Why AMD's Stock Is Not Worth $20.)

Putting the fundamental and valuation stuff aside and just examining Advanced Micro Devices shares from a purely trading and technical view, the chart looks very bullish. It is also set up very nicely for what could be a breakout toward $18. That's, of course, still below $20, and would increase AMD's multiples even higher. But it is important to remember that multiples and valuation are not always the driving force behind a stock price.

Ascending Triangle

 

 

 

 

In the shorter-term hourly chart of AMD, we can see a well-defined upward trend in the stock to the lows seen in February 2016, in purple. We can also see the top's around the $15.50 level that represents a technical resistance area. All of the lines come together to a form an ascending triangle. An ascending triangle is a technical pattern and a bullish one.  

A clean break above the $15.50 resistance level would send Advanced Micro shares much higher. Of course, it is important to note that a significant fall below the upward sloping purple trend line would be bearish for the stock and likely send the price lower toward $10. 

$18

 

 

 

When looking at the longer-term daily chart, we see that the red resistance line at $15.50 finds its roots from a time long ago, in the mid-2000's. A light blue line has been drawn in to accentuate it. The $18 level comes from the gap created at the beginning of 2007, and a series of lows before the gap; the line is in green. 

The chart of AMD is certainly supportive of a move higher for the stock. The fundamentals continue to be a sticking point, but for now, the technicals seem to be dominating the stock, with a bullish pattern that is in place and well-defined. 

 

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 holdings. Information 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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