Applied Materials Is in a Well Structured Setup

Published on Wednesday, 20 June 2012 06:16 Written by TradersHuddle Wire

New York, June 20th (TradersHuddle.com) - Applied Materials, Inc. (NASDAQ:AMAT) closed the trading day at $11.18, near its 50 day and 200 day moving averages set at $11.11 and $11.54 respectively. Applied Materials' price action placed the stock above the 50 day moving average but below its 200 day moving average, providing a nice trading setup with clear reference points.

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 seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach appears to be the best way to maximize possible movements in the stock, as traders could establish a small position in Applied Materials and wait for the stock to break out above the 200 day moving average at $11.54. Then they could add to the position as momentum builds with the breakout. On the other hand, if support being referenced at the 50 day moving average set at $11.11 breaks, it could signal further downside for Applied Materials in the horizon.