re: My read of the chart says.........
2Y chart:
stockcharts.com[h,a]dahlnyay[de][pb50!b200!f][vc60]&pref=G
given:
1. this is a very volatile stock, and
2. we currently have good reasons to buy the stock (semi-equip bookings just past their cyclical trough, which is the safest time in the cycle to go long), and
3. good reasons to sell the stock (many aren't convinced the Bear Market is over, and AMAT's valuation already prices in the rosiest scenario and more)
4. 28 is the top of the channel, and the channel is either rising or horizontal, but not declining. Looking longer-term than your chart, it's clear that the area around 28 is strong resistance. The stock stalled in about that area repeatedly from 10/00 through 6/01, and made a triple top there, within the last 2 months.
5. AMAT frequently makes 30% dips, repeatedly, during upcycles (and downcycle=Bear-Market rallies of up to 50%)
6. earlier this month, AMAT bounced at the 200D moving average, at 22
7 the region of 17-22 is where the stock has bounced on every dip since October 2000 (aside from the 9-10/01 panic-selling event)
then:
1.The bottom of the channel is probably somewhere around 20. I'd give about a 80% certainty we bounce between 18 and 22.
2. all the above is moot if we get another 9/01-type event.
I have no current position. I'm planning on buying a lot (but not enough that I'd have a margin call if AMAT takes out the 10/01 lows), with limit buy orders in that 18-22 area, and then selling (probably half my position) in the 25-28 area. |
