The Chart du Jour

Entering the Air Zone: AMAT

September 26, 2000

By, Barclay T. Leib

"Imagine if you will, a man alone in a darkened room...the twinkle of the computer screen showing day by day, his total wealth being wiped out. Yesterday it was Intel, the week before Lucent, next week maybe Apple or Cisco. The sweat on his brow mounts...Ah, good news at last: oil is dropping...but alas stocks don't react the way they should. They keep falling..."

No, this is not a scene from the 1960's thriller Twilight Zone, but very quickly it could be the year 2000's Air Zone.

You see, when stocks advance in a parabolic fashion -- a la perhaps Micron or Applied Materials in the current instance -- they invariably leave a "hole of fast trading" on the way up. I term this the "air zone" of the ascent, and it represents that distance above any noticeable chart work on the way up but below the first stopping point on the way down. As the chart below attempts to show, Applied Materials (AMAT) pictured on the right is quickly approaching its "air zone" in a relatively similar manner as gold approached its "air zone" back in 1980. Although some work at the top edge of the "air zone" may be anticipated, once broken, there is simply no support to point to for a considerable distance. In the case of AMAT, we think a price toward about $45 beckons with time.

Chart produced using Advanced GET End-of-Day

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