Applied Materials Breaking Down?

Published on Thursday, 26 August 2010 05:32 Written by Christopher Lynn

New York, August 26th (TradersHuddle.com) - Shares of Applied Materials, Inc. (NASDAQ:AMAT) closed the trading session at $10.71 below calculated support at $10.94 breaking current long setups, raising concerns by the bulls, as this move might give the bears the upper hand.

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 was trading in a well defined range with support at $10.94 and resistance at $11.62; given that this range was broken traders will be closely monitoring the stock?s price action for clues of direction.

From a technical perspective it can be expected that previous support becomes resistance, as the new range gets defined, however, given that Applied Materials' stock is still near the broken support, traders will be focusing on $10.94 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in Applied Materials can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $10.94. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.