During the recent trading sessions stock of Advanced Micro Devices, Inc. (NASDAQ:AMD) was gathering the crowd in the stock market. Many analysts use price trends and patterns to predict future performance, and we can glean some important insights about AMD by examining the chart.
How has the stock performed recently?
Advanced Micro Devices, Inc. (NASDAQ:AMD) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of AMD has increased +2.33%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -129%. After the latest session, which saw the stock close at a price of $10.98, AMD sits below its 52-week high.
Of course, these surface-level price movements don’t tell us much about the direction that AMD may be headed in the future. If we want to get a sense of AMD’s future performance, we have to look at the speed and size of these price movements. Using what are known as momentum indicators, we can use the stock’s price momentum to get a sense of whether the stock is in the midst of, or nearing the end of, a current trend. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for AMD is 50.53%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 54.59%, tells a similar story, and suggests that AMD currently trades in neutral territory.
What do the trading volumes reveal?
Price isn’t the only tool analysts use to forecast future performance. Volume patterns can also reveal some important insights. If, for instance, a stock’s volumes suddenly increase by a significant amount, it’s usually a sign that the level of conviction behind the trade is high. Investors may feel very strongly about the future direction of the stock in question. Advanced Micro Devices, Inc. (AMD) average trading volume of 39,886,121 during the past month is 37.59% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
AMD is currently undervalued by -24.12% relative to the average 1-year price target of $14.47 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.70, which implies that analysts are generally neutral in their outlook for AMD over the next year.
How risky is the stock?
When analyzing a stock’s price performance, it’s essential to take risk into account. Beta, which measures a stock’s volatility relative to the overall market, can be used to gauge the level of systematic risk associated with a particular stock.
Advanced Micro Devices, Inc. (NASDAQ:AMD) has a beta of 2.44, compared to a beta of 1 for the market, which implies that the stock’s price movements are more extreme than the market as a whole. AMD therefore has an above average level of market risk. During the past couple of weeks, AMD average daily volatility was 45.19%, which is 1.67 percentage points lower than the average volatility over the past 100 days.