Chart of the Day: Applied Materials Keeps Pushing Forward
New highs for this chip equipment maker tells us more upside can be had.
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Stocks in the technology group are pretty overbought now, but is that a reason to sell? Remember, overbought is a condition and not a signal, hence a condition can exist for quite awhile, much longer than anyone could anticipate. Trying to call a top can be fatal to your wealth.
Applied Materials AMAT is one of those overbought stocks that continues to make higher highs, higher lows. That is a textbook bullish trend in our book, and while the chart is reflecting overbought on several indicators, we certainly won't abandon a strong name. AMAT's candles in the chart below are mostly blue, reflecting a bullish condition based on the GoNoGo composite of indicators.
Moving Average Convergence Divergence (MACD) recently crossed for a bullish signal after a modest pullback. Money flow is strong as big institutional buyers continue to pile into this stock, regardless of the overbought condition.
With AMAT around the $255 area any pullback towards $234-$240 would be a gift, and buy on that retreat. While the best names hardly ever give you a chance to get on board, it's something to consider.
We rate Applied Materials a Two in TheStreet Pro Portfolio.
More Pro Portfolio:
- Locking in Big Gains on This High-Flying Stock
- Weekly Roundup: Reasons to Be Cautious
- Reading the 'News Signals' From Our Investing Notebook
At the time of publication, TheStreet Pro Portfolio was long AMAT.
