To receive further updates on this Applied Materials (NASDAQ:AMAT) trade as well as an alert when it’s time to take profits, sign up for a risk-free trial of SlingShot Trader today. 

Today, we’re opening a new bullish trade on Applied Materials (NASDAQ:AMAT). AMAT took a hit in November after analysts raised concerns about NAND memory. The issues appear to be overblown, and last Wednesday the stock formed a base and made a breakout.

Faster, cheaper memory seems to be an inevitable trend, which bodes well for stocks in this sector and puts the odds in favor of a run up into next month’s earnings report. Many analysts at firms like Credit Suisse are arguing the same thing.

We are currently targeting a short-term rally to the previous highs near $60. However, that outlook will likely be raised if there is still momentum when it gets beyond the key reversal day of Nov. 17. We see this as a good opportunity to buy as momentum is breaking out rather than at all-time highs.

Buy to open the AMAT February 57.50 Call (AMAT180216C00057500) for a maximum price of $2.20.

Follow our Facebook page to receive each Trade of the Day direct to your News Feed — and join the conversation.

You can learn more about identifying price patterns and using them to project how far you think a stock is going to move in our Advanced Technical Analysis Program.

InvestorPlace advisers John Jagerson and S. Wade Hansen, both Chartered Market Technician (CMT) designees, are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news. Get in on the next SlingShot Trader trade and get 1 free month today by clicking here.