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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.
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