The stock market runs on cycles, Jim Cramer reminded his Mad Money viewers Tuesday evening, and in this market, we've got a ton of them. In fact, there are almost too many mini-bull markets to mention.
Let's look at the charts of AMAT. On May 5 we wrote that "I have recommended a sell stop at $124 on AMAT and Jim Cramer told a Mad Money viewer that $118 needs to hold. Take your pick."
In this daily bar chart of AMAT, below, we can see that both the $124 level and the $118 level were broken. A stop below $115 would have been successful in hindsight. Now AMAT is pointed higher again as it is trading back above the rising 50-day moving average line.
The On-Balance-Volume (OBV) line looks like it made a low earlier this month and the Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal and it is close to an outright buy message.
In this weekly Japanese candlestick chart of AMAT, below, we can see a couple of lower shadows below $120 as traders rejected those lows. The slope of the 40-week moving average line is positive.
The weekly OBV line looks like it is going to turn higher to confirm the price gains. The MACD oscillator is narrowing towards a new buy signal, in my opinion.
In this daily Point and Figure chart of AMAT, below, we can see a potential upside price target in the $176 area.
Bottom line strategy: Traders who were stopped out could rebuy AMAT on a dip towards $130. Risk to $121. The $176 area is our price objective.