Stock Of The Day: Is This The Top For Applied Materials?

Applied Materials, Inc. (NASDAQ: AMAT ) shares are rising on Tuesday. The move comes after positive comments from a brokerage firm. We have made Applied Materials the Stock of the Day. The upside momentum has reached historic levels. If a stock is driven above its typical or normal range by emotional and aggressive buyers, traders say that it is ‘overbought’. This could be an important dynamic. Many trading strategies are based on the concept of reversion to the mean. If a stock is overbought, traders will enter the market as sellers. They will be anticipating a reversion or move lower. Their selling could put pressure on the stock. The lower part of the chart is the Relative Strength Index (RSI). If the blue line is above the horizontal red line, it indicates overbought conditions. As you can see, that is the case now. The indicator uses a weekly timeframe. Based on this perspective,...