Sector Scorecard: 2 Swooning Semiconductor Stocks

Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NASDAQ:AMD) are two semiconductor stocks struggling on the charts

by Alex Eppstein

Published on Aug 6, 2015 at 12:07 PM

It's been a forgettable year for semiconductor stocks. Of the 49 names we track -- including blue chip Intel Corporation (NASDAQ:INTC) and rival Advanced Micro Devices, Inc. (NASDAQ:AMD) -- just four are currently perched atop their 80-day moving averages, and the typical year-to-date loss registers at 3.7%. Along similar lines, the Market Vectors Semiconductor ETF (NYSEARCA:SMH) has tumbled more than 6% in 2015. Having established the sector-wide weakness, let's dig deeper on the two aforementioned stocks, INTC and AMD.

INTC has surrendered more than 20% of its value this year, last seen at $28.94. More recently, since hitting a year-to-date high of $34.75 in late May, the stock has tumbled 16.7%, and has been consolidating atop its 10-day moving average in recent weeks.

For some reason, though, options traders have failed to acknowledge INTC's technical troubles. During the last two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has amassed a call/put volume ratio of 2.93 -- with long calls nearly tripling puts. More significantly, this reading ranks in the 97th annual percentile, indicating speculators have scooped up bullish bets over bearish at a near-extreme rate. A capitulation among these optimists could result in headwinds.

The brokerage crowd has tilted bullishly toward Intel Corporation, too. Seventeen of 30 analysts rate the stock a "buy" or better. This could pave the way for future downgrades, exacerbating selling pressure.

Shifting our focus to AMD, this security has also lost about 20% year-to-date, trading at $2.13. Looking more closely at the charts, a recent rebound has been contained by the stock's 50-day moving average, which could send the shares on their next leg lower.

Future losses would be less unexpected for AMD than INTC, based on Wall Street sentiment. For one, nearly one-fourth of Advanced Micro Devices, Inc.'s float is dedicated to short interest -- the equivalent of roughly seven sessions of activity, at typical volumes. For another, over three-quarters of analysts tracking the shares have designated them a "hold" or worse, and a number of price-target cuts have hit the wires in recent weeks. In short, expectations for AMD are already quite low.

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