Chart of the Day: Time to Add to Applied Materials?
While a rising tide lifts all boats, the opposite happens when low tide appears. Every boat, no matter how solid, has trouble staying afloat. We see that to be the case with Applied Materials ($AMAT); the stock has been hit hard following weakness in computer memory and storage names, weakness in competitors and overall worries about the length of the AI boom.
The recent move in the stock is probably not reflective of the strong company fundamentals, in fact, last week competitor Lam Research ($LRCX) laid out a huge plan of better than expected earnings and revenue for the rest of 2026 and beyond. We should hear the same from AMAT when they report their next quarter on Aug. 13. Also, the stock is seeing a boost in trading this morning.
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The chart has shown bearish tendencies as the stock has fallen back from recent highs. A series of lower-highs and lower-lows is our textbook definition of a downtrend, and it certainly fits at the moment. Money flow is negative, as seen in the bottom pane of the chart, but starting to rise. The moving average convergence divergence, as seen in the second pane, is also bearish and moving back up. A recent test of the 200-day moving average seems to have been successful, but a few more days above there will give us more confidence in the test. One day and step at a time here, but adding at this moment is not a bad idea.
We like Applied Materials in the Pro Portfolio and rate it a two, stock pile on weakness.
At the time of publication, the Pro Portfolio was long Applied Materials.
