Apple Supplier Running into Technical Ceiling

Applied Materials is running out of steam on the charts

Chip name and Apple supplier Applied Materials, Inc. (NASDAQ:AMAT) is running out of steam on the charts lately, breaking down below its -20% year-to-date level, which coincides with its 10% year-over-year gain area. With the shares now forming a rising wedge breakdown pattern, and additional resistance emerging at their 200-day moving average, AMAT could encounter more technical trouble in the coming months.

AMAT's Schaeffer's put/call open interest ratio (SOIR) of 1.02 sits in the low ninth percentile of its annual range, suggesting that short-term options players have rarely been more call-heavy during the past 12 months. An unwinding of these bullish bets could add options-related pressure to the equity.

Meanwhile, analysts are unfazed by the technical weakness. Of the 18 brokerages covering AMAT, 13 dole out "buy" or better ratings, with not a single "sell" stance to be found. Should the equity continue to struggle, a round of overdue bear notes could act as headwinds.

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