Place Your Chips on Intel

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

Intel (NASDAQ:INTC) — The world’s largest semiconductor chip maker has a confluence of positive signals currently that may offer a good long-side opportunity for traders. Besides the solid technical picture, the company currently sports a 7.5 times 2012 price/earnings ratio, a 4% dividend yield, and net cash on its balance sheet of around $10 billion.

The four-year weekly chart shows that despite the hard fall as of late, Intel is still more or less at the uptrend line dating back to early 2009. 

INTC Weekly Chart

On the 12-month daily chart, there is support near $19.50, but technical analysis 101 dictates that if a stock is below both its 50-day and 200-day simple moving averages, then the trend is not up. That is of course true, and as such, the trade I see setting up here is simply an oversold bounce rather than a long-term buy and hold.

INTC Daily Chart

On the close-up chart dating back to early June, note the oversold levels in the slow stochastics and the cluster of long candles in the gray area.

INTC Close-up Chart

Like I mentioned yesterday, given the environment we are in, it is difficult to make many longer-term trades based on technicals until the downward momentum slows down.

The trade I see setting up here is to go long INTC stock near $19.90 with a stop at $19.50 and a target near $21.50.


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