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Steer Clear of Plunging AMD: Famed Market Watcher Marc Chaikin

Not all tech names are sexy.

Famed chartist Marc Chaikin says there are multiple signs that struggling Advanced Micro Devices (AMD - Get Report) is one stock that investors should avoid.

"This isn't Jim Cramer pushing the stock down. This is bad fundamentals," Chaikin, CEO of Chaikin Analytics, said at TheStreet's Financial Success Strategies symposium. "[AMD] has gotten nowhere for the last several months. It's still bearish."

AMD has been plunging ever since the chipmaker reported its fiscal third-quarter earnings on Oct. 24. The stock has fallen more than 20% in the past five days and closed at $10.89 on Monday, down some 8% on the day.

Chaikin Analytics CEO Marc Chaikin

Igniting the sell-off was AMD's lackluster guidance for the fourth quarter, as well as management comments about stabilizing demand for cryptocurrency mining chips and slowness in the gaming market, among other factors. On Monday, Morgan Stanley slashed AMD's rating to "Underweight" from "Equal Weight" and cut its price target to $8 from $11, implying that the stock could fall 32%.

TheStreet's Jim Cramer recently called AMD's third-quarter earnings "sub par" and said the numbers confirm that the company is losing out to competitors Nvidia Corp. (NVDA - Get Report) and Intel Corp. (INTC - Get Report) .

Not long after that, AMD bulls took to Twitter and argued that Cramer had a hand in the stock's big decline. Cramer replied on CNBC's Mad Money on Thursday. "This is business, not personal. ... If a company misses estimates, it's not my fault that its stock goes down."

But, Chaikin noted at TheStreet's investor symposium that his Power Gauge Rating on AMD has been bearish since April -- long before Cramer began laying out the risks for the stock. Chaikin's Power Gauge Rating is a multi-factor model that analyzes a stock's potential. The Power Gauge Rating is based on technical, fundamental and sentiment indicators -- and in AMD's case, plenty looks bad:

"Twenty factors in the model all stacked up against AMD," he said. "Something isn't right."

The broader market would agree.

Nvidia is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio . Want to be alerted before Cramer buys or sells NVDA? Learn more now.


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