Apple Supplier Running into Technical Ceiling

AMAT is experiencing resistance from its 200-day moving average

May 7, 2020 at 10:26 AM
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Chip name and Apple supplier Applied Materials, Inc. (NASDAQ:AMAT) is running out of steam on the charts lately, breaking down below its -20% year-to-date level, which coincides with its 10% year-over-year gain area. With the shares now forming a rising wedge breakdown pattern, and additional resistance emerging at their 200-day moving average, AMAT could encounter more technical trouble in the coming months.

WKALT AMAT Stock Chart

AMAT's Schaeffer's put/call open interest ratio (SOIR) of 1.02 sits in the low ninth percentile of its annual range, suggesting that short-term options players have rarely been more call-heavy during the past 12 months. An unwinding of these bullish bets could add options-related pressure to the equity.

Meanwhile, analysts are unfazed by the technical weakness. Of the 18 brokerages covering AMAT, 13 dole out "buy" or better ratings, with not a single "sell" stance to be found. Should the equity continue to struggle, a round of overdue bear notes could act as headwinds.

 Subscribers to Schaeffer's Weekend Trader options recommendation service received this AMAT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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