Applied Materials (AMAT) is a company that produces equipment, services, and software for the semiconductor industry. The company recently reported its earnings on February 16, 2023, and while the results were positive, the stock's recent movement is showing a potential sign of a reversal.
The upper Bollinger Band, a technical analysis tool used to gauge a stock's volatility and possible price moves, was broken above by AMAT on February 1st, 2023. A stock is deemed overbought and may be headed for a pullback if it breaches its upper band. AMAT's stock has since moved back below the upper band and toward the middle band, confirming that this is exactly what happened.
For traders and investors, this could be a signal to consider selling the stock or exploring put options. A.I.dvisor, an AI-powered trading platform, analyzed 44 similar instances where the stock broke above the upper band and found that in 33 of those cases, the stock fell afterwards. This puts the odds of success at 75%, suggesting that AMAT may be due for a pullback in the near future.
While the recent movement of AMAT may be cause for concern for some investors, it's important to note that the company's earnings report was positive. Applied Materials reported revenue of $6.1 billion, an increase of 12% year-over-year, and earnings per share of $1.82, an increase of 22% year-over-year.