Chart of the Day: This Tech Holding Is Building a Base
Here's what the stock needs to do to confirm a low is in.
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We have talked about the need for base-building after a stock gets sold off and relegated to lower level. It is a process. The first part is for the stock to stop going down, and find a spot where buyers are not hesitant to pick up shares. That seems to be the case here with TheStreet Pro Portfolio holding Applied Materials AMAT, a stock that has been bludgeoned severely but is now starting to show some improvement.
Make no mistake, however, this chart is still bearish, but it is trying to turn the corner at least to neutral. After the heavy downtrend that persisted since October, that would be considered progress.
What is fascinating to see in the price chart are the multiple tries to break below $165-170 zone. For nearly six weeks now buyers are picking up shares on every test of that area. That is not bearish, but not yet bullish either.
Stochastics (momentum) has turned up and even the MACD (moving average convergence/dibvergence) is showing some life. Money flow has improved, the price candles are pink rather than purple (cuatiously bearish) but those are sensitive here. Since July the candles have mostly been pink or purple even as the stock made a modest run higher.
In the end, we still like the business of Applied Materials, while the chart is saying to wait a little bit longer for this base to finish (maybe a month) before starting to nibble at the stock if you're looking for more.
We like AMAT in TheStreet Pro Portfolio and rate it a Two, or "stockpile on pullbacks."
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At the time of publication, TheStreet Pro Portfolio was long AMAT.
