Don't Ignore This Chart!

Mind the Gap in AMAT


The long-term trend for Applied Materials (AMAT), a big semiconductor equipment manufacturer, is clearly up and the short-term trend could be turning up again with a gap three days ago. The chart below shows AMAT hitting a 52-week high in early June and then forming a large triangle. This is basically a large consolidation within an uptrend, which means it is a bullish continuation pattern. A move above 48 would break triangle resistance, but this level is still quite far away. 

The action within the triangle is what caught my interest. The arrows show three swings within this triangle (down, up, down). The current swing is down, but could be reversing with the gap on Monday. The red line marks resistance from last week's high and this is the first level to beat. The indicator window shows 10-day RSI almost becoming oversold this month for the third time since April. 

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--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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