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Applied Materials (AMAT - Get Report) has had a volatile Friday. The stock closed loser by 1.1% but bounced off its session lows after the chip-equipment producer reported results.

Earnings of 74 cents per share beat estimates by 4 cents. Revenue of $3.56 billion topped estimates by $30 million but dropped 14% year over year. Management provided in-line guidance as well.

Initially, the shares took a dip on the news, falling to a low of $44.62. Bouncing now, the stock is back above a few key levels.

Unlike Applied Materials stock, others like Lam Research (LRCX - Get Report) and Advanced Micro Devices (AMD - Get Report) are rallying on Friday.

Management's comment that it is "still not ready to call the bottom of the cycle" is likely preventing investors from becoming too optimistic on Applied Materials stock. Let's look at the chart to get a better idea of what's going on.

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Trading Applied Materials Stock

Daily chart of Applied Materials stock.
Daily chart of Applied Materials stock.

The chart above reflects a few positives and a few negatives. The good news first: Applied Materials stock broke below key support between $45 and $45.50, as well as the 50-day moving average, but the shares were able to reclaim this mark in the same session.

That bodes well for investors, as buyers obviously showed up below this key mark and bears were unable to hold the stock below it. It's also encouraging that Applied Materials stock is above its 200-day moving average and all its major one-year retracements (the 38.2%, 50% and 61.8%).

The negative news? AMAT stock is still below the 20-day moving average.

Further, uptrend support (blue line) was support from June until the start of this month. But it's maintaining below this mark and reclaiming it will be difficult.

That's not necessarily a nail in the coffin for the bulls but it's not a positive. Nor is the short-term downtrend resistance line currently in play (purple line).

So what's the game plan from here? It's quite simple really.

Below the 50-day moving average and $45 opens the door to more selling. My first downside target would be the 38.2% retracement at $43.39. That would be a reasonable risk/reward, particularly with the 100-day moving average at $43.69.

Below those levels and the 50% retracement and 200-day moving average come into play.

On the upside, look to see if Applied Materials stock can reclaim the 20-day moving average and short-term downtrend resistance. Over this area and a run to prior uptrend support (blue line) is possible.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.