Swing Trade Idea (AMAT) – July 6, 2023
OptionsPlay’s bearish trade for Thursday, July 6th is Applied Materials Inc. (AMAT). AMAT is part of the Technology Sector, which has performed at 3.31% over the last month, with AMAT performing at 5.67% over the same period, as both has traded into the top of a trend channel.
AMAT had a strong rally into an area of resistance at $140 – $145 from where a pullback is expected to lower levels. As this is a counter-trend trade, we expect AMAT to trade lower over the duration of this trade, with the next support at around $125. The Technology Sector has also traded into the top of an uptrend channel, and is already showing signs of weakness, which underscores our bearish thesis on this trade.
As a stop loss, if AMAT were to trade above $148 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We will also consider cutting losses on this options trade if the value of the vertical spread moves below $2.09.
