Intel Corporation (INTC): How to Play Intel Stock Right Now

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Intel Corporation (NASDAQ:INTC) has been among the winners of the most recent rally in stocks. As unlikely as the move might have seen a few months ago, price action is the only thing that pays, so you have to respect the trend (until it ends). However, while this move higher in Intel stock could continue, active investors and traders should look to fade the rally.

Beat the Bell: Intel Corporation INTC stockEarnings season is upon us, and this means traders must keep a careful eye out for when stocks on their watch lists — as well as close competitors — are scheduled to report earnings. INTC reports its latest earnings on July 20. With Intel stock up 15% since late June, one wonders how much further it can rally in the near-term — even if next week sees great earnings and a rosy outlook.

The bulls argue that INTC — with decent growth prospects and a 3% dividend yield — beats owning bonds. The question is how much longer yield-starved investors are willing to pile into dividend stocks, which by definition are riskier than bonds. Personally, I am willing to respect this trend until it ends, but we should be careful around earnings dates.

Intel Stock Charts

On the multiyear weekly chart, we see that in 2014, after INTC broke above its longer-term line of resistance (black horizontal) in the high $20s, it spent much of 2015 in consolidation mode. Intel stock also retested and marginally broke back below this line, as well as the red 200-week moving average, before blasting back above it in the fall.

The most recent rally has now marginally broken INTC stock above the diagonal resistance line (see blue bubbles). While from a trend perspective this is bullish, as we will see on the daily chart below, traders may have gotten a little too giddy in the near-term.

Intel stock chart weekly INTC
Click to Enlarge

On the daily chart, we see that the rally off the May lows now matches in magnitude the rally from February into March. The MACD oscillator is also in serious overbought territory, and Intel stock is once again overextended above its yellow 21-day MA.

Lastly, INTC has gapped higher each of the past three trading days — a feat that usually doesn’t last very long before a mean-reversion move lower or a sideways pause sets in.

Intel stock chart daily INTC
Click to Enlarge

Active investors could look to carefully leg into partial short positions in Intel stock or buy cheap puts for a mean-reversion trade back toward the $33-$33.50 area. If the stock fails to pause in the mid-$30s, then it is best to get out of this trade with small losses and let the momentum higher continue until the next overbought condition rears its head.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/07/intel-stock-intc-how-to-play/.

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