Speculators interested in snagging some quick profits may set their sights on ACM Research (NASDAQ:ACMR) over the next two weeks. A semiconductor company, ACM doesn’t generate the type of headlines reserved for the usual suspects in the space. Instead, the business is more of a behind-the-scenes player, specializing in the manufacture and sale of single-wafer wet cleaning equipment.
Given the importance of the underlying specialty, ACMR stock has been a top performer. Since the beginning of the year, the equity gained almost 64% of market value. It’s also been on a strong run recently, moving up nearly 10% in the trailing five sessions. Those in the know aren’t surprised by the robust performance because wafer cleaning is crucial in semiconductor fabrication, particularly for artificial-intelligence chips.
At a cursory glance, wafer cleaning sounds like a boring function. However, when manufacturers make computer chips, they layer materials on a wafer through processes such as deposition, etching and photolithography. Each step leaves behind residues, particles or chemicals that can ruin the chip if not cleaned properly. Such protocols are especially critical for AI chips because of their high cost.
At the same time, ACM has heavy China exposure, with the world’s second-largest economy being the company’s major revenue driver. As such, the political backdrop — in particular, President Donald Trump’s tariff policies and potential future negotiations — clouds the narrative.
To help mitigate the impact related to U.S. export restrictions, ACM has adapted with localizing efforts. For example, the company has expanded operations within the U.S., including a new facility in Oregon. Nevertheless, the political question has been a thorn for many businesses, raising some concerns about ACM stock.
After all, over the past one-year period, the equity only gained just over 6%. Therefore, the stock has proven to be a choppy ride at times. Still, swing traders may have an opportunity to play the momentum game.
Although the financial publication industry focuses largely on narratives — which to be fair provide color and context — storylines alone don’t provide enough information for traders. That’s especially true for those who deal with options. These derivatives have expiration dates and so require more precise, predictive analysis.
Subsequently, that’s where market breadth comes into the picture. At its core, market breadth is the balance of accumulative and distributive sessions; in a way, it’s how the market breathes and reacts to stimuli. Another way to look at this metric is that it’s a representation of demand and demand is binary— it’s either happening or it’s not.
More importantly, binary constructs are discrete events, which can be categorized and quantified. With discrete-event analysis, one of the main benefits is stationarity: the metric of comparison doesn’t drift temporally, thus facilitating apples-to-apples comparisons for probabilistic research.
In the past two months, ACMR stock printed a 4-6-U sequence: four up weeks, six down weeks, with a net positive trajectory across the 10-week period. Notably, in 61.9% of cases, the following week’s price action results in upside, with a median return of 6.97%.
On Friday, ACMR stock closed at $24.70. If the implications pan out, the equity could hit $26.42 in short order. As such, those thinking about advantaging this market intelligence may consider the 25/26 bull call spread expiring June 20.
The above transaction involves buying the $25 call and simultaneously selling the $26 call, for a net debit paid of $50. Should ACMR stock rise through the short strike price at expiration, the maximum reward is also $50, a payout of 100%.
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