AMAT: Chart of the Week

Today we’re gonna be talking about Applied Materials, symbol AMAT. They have earnings coming out tomorrow night, Thursday, May 18, after the close.

As you can see I’ve plotted a trend line from the bottom that came in around the early to mid-part of October – $78 – $80. It’s made a nice series of higher highs and higher lows until the early part of April when you can see the stock corrected a little. It did correct down to a good support level, going back to November highs and even December highs. This was an area where the stock had some resistance and now has some support – let’s call it about the $110 – $112 range.

Ever since, the stock’s just been on fire, especially this week. The last couple of days – Monday, Tuesday, and Wednesday – the stock has been up strong, close to 7% over the past three days. Good volume as well too.

You can see a nice crossover on the MACD. We also have a positive reading in crossover on the no-sure thing indicator. It’s a technical indicator used to predict momentum and price movements in different markets. It’s calculated by using the moving averages of four rate-of-change periods. It’s an indicator tool that’s used in market analysis. It gives a fairly detailed overview on short- and long-term price patterns. When you get these crossover moves on the no-sure thing, you gotta pay attention. They’re extremely important.

At the bottom pane, which is the Trader’s Dynamic Index, which is an indicator I use quite a bit, it evaluates the chart as it relates to Bollinger bands versus relative strength. Relative strength has been super strong the last couple of days. You can see we got that crossover move in the earlier part of May and confirmed on the next day. This is on a buy signal too.

You can see the candles turned from teal yesterday to blue today. That is a strong buy signal when we’re on blue (cautious bull signal when it’s teal, neutral when it’s amber like it was a couple of days ago), but we’ve moved into that blue right now.

Where might we encounter a little bit of resistance? If we stretch out the trend line that I drew back in October, that comes in at around $130 – $132. We’re $125 right now, so maybe another $6, $7 of upside before this decides to wear out.

We are at some resistance levels right now from March and early February. We can break through there tomorrow, especially given earnings coming out later after after the close. I do have some call positions on this name as well. I think over time – maybe June, July, August – would be a good spot to add some Applied Materials calls.

So that’s Applied Materials (AMAT)!