The hits keep coming for semiconductor firm Advanced Micro Devices (AMD: sentiment, chart, options), as the shares have plunged more than 69% so far this year. We could see an extension of this decline, as Moody's Investors Service cut AMD's corporate family rating to B3 from B2 following the company's fourth-quarter earnings warning. Moody's also said that AMD will remain depressed through 2009, and that profitability and cash flow will remain negative. The ratings firm held AMD's outlook at negative.

Technically, the shares have recently rallied above their 10-day and 20-day moving averages and appear poised to hold short-term support at the 2 level. There are indications that the stock could receive a near-term bounce, as its 10-day and 20-day trendlines are poised for a bullish cross. Today's ratings cut by Moody's could spoil the party, however.

Options traders apparently believe that AMD has seen the worst of its decline, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.51 indicates that calls nearly double puts among options with less than 3 months until expiration. Furthermore, this ratio ranks below 91% of all those taken during the past year. Should the Moody's downgrade disillusion some of these bulls, AMD could resume its trend lower due to the added selling pressure.