This Is How To Decipher Pullbacks Like A Pro And Analyze Setups Like AMAT Stock

IBD Senior Markets Writer Ken Shreve joined the Investing With IBD podcast to discuss the technical action needed to warrant putting the market back in a confirmed uptrend. Plus, he explains what investors should look for when a stock pulls back to its 10-week line so they can decipher charts like a pro. We also analyzed three hot stocks with solid action: AMAT stock, UPST stock and INMD stock.

Applied Materials (AMAT) is carving the right side of a base while InMode (INMD) is starting to form a base and Upstart (UPST) is a highflying new issue hitting new highs after a short pause.

Audio Version Of Podcast Episode

Video Version Of Podcast Episode


Market Conditions Continue To Improve

With the Nasdaq composite and Russell 2000 climbing back above their 50-day moving averages this week, market conditions are improving. However, a true sign of strength would be to see the S&P 500 get back to new-high territory.

AMAT Stock Among Chip Sector Standouts

Action among chip equipment makers has been notable this week. AMAT stock is powering higher after poking above a declining-tops trend line last Friday. Along with other leading chip gear stocks, it’s forging the right side of a base.

Shreve gives his take on the week’s market action and how he’s positioned his portfolio during the last few months of choppy trade.

Pullbacks To The 10-Week Line

Pullbacks to the 10-week moving average or 50-day line can be compelling areas to add to a position or start a new one. They also can provide a clear line in the sand to get out of a trade. Shreve shares key tips for deciphering pullbacks like a pro, including why you should look at daily and weekly charts.

Plus, he describes what a “rebound with conviction” looks like and why it’s imperative to look at volume with a fine-toothed comb. Make sure to listen to the full episode for all the details.

Stocks To Watch

Shreve analyzed several hot stocks on his radar forming setups: INMD stock, AMAT stock and UPST stock.

INMD Stock

After undercutting its 10-week line a few weeks ago, INMD stock is now back above that key level. Shares are working on a base with a 92.48 buy point. If INMD stock can continue to work on the right side of its base, the relative strength line could hit new highs. That’s a bullish indicator of relative outperformance.

Shreve noted the strong fundamentals for the maker of devices for noninvasive cosmetic procedures.

AMAT Stock

Applied Materials is among leading semiconductor equipment stocks flexing their strength as of late. AMAT stock cleared the declining-tops trend line as it retook its 50-day line, and is continuing to climb higher.

Shares look like they’re pausing here, which means we could see a handle form just under the 140 level.

UPST Stock

Among recent IPOs, UPST start is getting a lot of attention as Reddit traders push shares higher. After surging back above its 50-day line, shares didn’t rest long enough to form a proper handle before blasting to new all-time highs on Thursday.

Investors should make sure they aren’t chasing highflying stocks. It’s important to be laser-focused on proper setups to increase your odds of success.

Want To Find Setups Like AMAT Stock?

If you’re looking for the next top stocks primed to make big moves, check out IBD’s Stock Lists page. To get IBD’s real-time assessment of names like AMAT stock, check out IBD’s Stock Checkup page.

For new episodes of “Investing with IBD,” subscribe to our podcast on Apple Podcasts, Google Podcasts, Spotify, Stitcher or your listening platform of choice.


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