Range Tightening in Applied Materials

Published on Wednesday, 01 February 2012 06:04 Written by Danny Miller

New York, February 1st (TradersHuddle.com) - Shares of Applied Materials, Inc. (NASDAQ:AMAT) closed the trading session at $12.28 placing the price action in a very tight range, given that calculated support is set at $11.98 and the calculated resistance based on an algorithm of peaks and troughs is set at $12.64

Applied Materials, Inc. (NASDAQ:AMAT) provides nanomanufacturing technology solutions for the semiconductor, flat panel display, solar, and related industries worldwide. The company provides a range of manufacturing equipment used to fabricate semiconductor chips or integrated circuits. Applied Materials' customers include semiconductor wafer and integrated circuit manufacturers, flat panel liquid crystal displays, solar cells, and other electronic devices manufacturers.

Applied Materials' stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Applied Materials' price action, as any movement outside its predefined range of $11.98 and $12.64 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $11.98 could spark above average selling. A tiered approach can be a good way to approach starting a position in Applied Materials', by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.