Leading stocks go through consolidation periods where weak hands forego their shares as impatience takes over. It's never fun to watch the stock market break to new highs while your stock(s) consolidate and fail to gain ground. A trained technical eye, however, needs to recognize continuation patterns that form on these leaders, because they'll likely lead again once their consolidation ends.
I believe that's the case right now with Applied Materials (AMAT). AMAT has been one of the strongest semiconductor names ($DJUSSC) since breaking out in November 2020. Volume trends remain very strong, but impatient traders may be losing sight of the intermediate- to longer-term, instead looking for more instant gratification. Patience will likely pay off here, however, as AMAT is likely printing an inverse right shoulder in a bullish inverse head & shoulders continuation pattern:
Healthy, leading stocks need breathers from time to time, and I believe AMAT is taking a breather right now. The inverse right shoulder could see AMAT drop a bit more, but it's likely setting up a better reward-to-risk opportunity in the days and/or weeks ahead.
Our Spring Special at EarningsBeats.com ends on Tuesday, June 15th. That will be the last opportunity to save 52% off our regular monthly membership. For more information, CLICK HERE.
Also, we'll be having our monthly Max Pain webinar on that same Tuesday at 4:30pm ET, discussing stocks that you'll need to be EXTREMELY careful with as options expiration Friday approaches. We're opening this one up to the public. If you'd like a seat to this very popular event, simply join our FREE EB Digest newsletter community and we'll send out room instructions before the event. You can join with your name and email address at the bottom left of our Home Page. There's no credit card required and you may unsubscribe at any time.
Happy trading!
Tom Bowley, Chief Market Strategist, EarningsBeats.com
