The September 2013 rally has so far taken with it many of the more important stocks and sectors, including the semiconductor stocks.
On Sept. 5, I discussed the bullish posturing on the charts of Micron Technology (MU). The stock has since done what it at the time looked like it would do, and that is rally to the tune of more than 10%. However, while Micron stock continues to act respectably, I am now finding better risk/reward on the long side of Intel (INTC).
The Market Vectors Semiconductor ETF (SMH) — of which Intel stock makes up more than 18% — broke past important resistance on Monday, and thus to new year-to-date highs. However, Intel itself remains roughly 10% below its YTD highs reached in early June, but has shown promising strength in the past few weeks.
The below chart of Intel stock shows that it’s broadly continuing to respect its November 2012 uptrend, and on the upper end, INTC likely has some resistance at its downtrend line that dates back to May 2012. For now, Intel stock has bounced nicely off its 200-day simple moving average (red line), which at the time in late August also coincided with the November 2012 uptrend.
Closer up on Intel stock’s daily chart, INTC has currently found resistance at its 100-day simple moving average (blue line), which also coincides with horizontal resistance dating back to a down-gap from July 18. Should Intel stock be able to overcome this immediate-term level of resistance around the $23.60 area, it stands a good chance of moving toward $24.25 as a next upside target, where it would also fill the July 18 gap as a next order of business.
Beyond there, the $25-$26 area serves as another upside target for traders to keep in mind.
As usual, and in order to see both sides, any major reversal lower from current price levels clearly would be bearish and should be a notable signal to hold off on trading INTC from the long side until better support is found.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.