Shares of Intel Corporation (NASDAQ:INTC) are basically flat for the year thanks to the most recent rally over the past month. While plenty of traders have been burned trying to trade INTC stock for a more sustainable breakout this year, the stock does remain well-positioned on its charts in just about all of the important time frames.
Since Intel reported earnings on July 27, the stock has rallied roughly 5% and as a result reached the upper quadrant of its year-to-date trading range and bringing about more hopeful chatter around the stock among smart-money investors I speak with.
A picture says a thousand words, so let’s dig right into the charts.
INTC Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
On the multiyear weekly chart, we note that INTC stock, despite the flat year-to-date performance, remains clearly trending higher but has been struggling to overcome simple horizontal resistance from the 2014 and 2016 highs around the $38 mark. Note that the multiyear up-trend as marked by the long blue arrow also roughly coincides with the red 200-week simple moving average.
Another way of looking at this is that while INTC stock has just treaded water since September of last year, this consolidation phase marked with the blue box on the chart is taking hold above the aforementioned support line and just below the $38 resistance point.
From where I sit, this could be looked at as “coiling-up” and might eventually lead to a more powerful breakout to the upside.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
The semiconductors as a group and represented by the VanEck Semiconductor ETF (NYSEARCA:SMH) are higher by nearly 22% for the year thus far. That is particularly impressive considering that INTC stock with 11% is this ETF’s second-largest holding. In other words, INTC has been badly lagging the semiconductor sector all year, or put differently, the sector has been massively outperforming Intel stock.
On the bottom part of the daily chart the blue line represents a simple ratio chart of the INTC stock divided by the SMH, and thus shows this underperformance.
On the top part of the chart we see that INTC stock’s recent rally now has it firmly pushing up against a simple diagonal line of resistance around the $36.50-$37 area. While INTC stock may be immediate-term overbought, a push and hold above $37 at the latest could provide a good opportunity to buy INTC stock for a next upside targets at $38, $39 and $40, i.e. in $1 increments. Although, I do not expect the $40 area to be reached in a straight line. Any bigger-picture bearish reversal in the stock would be a stop-loss signal.
Check out Anthony Mirhaydari’s Daily Market Outlook for Aug. 8.
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