Despite some positive earnings results, the broader market is edging lower this morning with the S&P 500 Index trading about 0.4% lower. We have been expecting to see some traders take profits from the market as the indices continue to tease us with higher prices. For the record, the end of July and into August tends to be one of the weaker seasonality points for the market during the year.
Today’s three big stock charts revisit Intel Corporation (NASDAQ:INTC) after its positive earnings report last night along with Advanced Micro Devices, Inc. (NASDAQ:AMD) and Analog Devices, Inc. (NASDAQ:ADI), as the semiconductor sector remains a bifurcated group with many of its constituents facing over head resistance that is worth taking note.
Intel Corporation (INTC)
Regular readers know that we were watching Intel ahead of yesterday’s earnings announcement with a bearish outlook. The technical picture has been overbearing for INTC.
Intel results topped expectations and their outlook was better than analysts had expected, resulting in a 2% rally in the after-hours trade. Less than 18 hours later, the stock is only trading 0.5% higher, despite the positive earnings. Here’s what the charts are telling us.
- Shares of INTC have worked their way into technically overbought territory as a result of the one-day rally. This indicates that the stock is ripe for profit-taking over the next week or so, leading to lower prices.
- Intel’s 50-day moving average currently sits at $35, which is the price that ALL traders need to be watching. This is the line of demarcation between a bull and bear market for INTC stock over an intermediate-term outlook. A move back below $35 will increase selling pressure immediately.
- In addition to the 50-day, Intel shares have already run into overhead resistance at the 100- and 200-day trendlines, causing the stock to sell from its earlier highs. Traders should be careful to maintain a cautious eye over the semiconductor giant as the intermediate-term chart still indicates lower prices for INTC.
Advanced Micro Devices, Inc. (AMD)
After a positive earnings season, Advanced Micro Devices stock saw a spike in price that is now pulling back from the highs.
AMD stock is a classic example of a “sell the news” situation that is likely to create a “buy the dip” opportunity for nimble traders.
- Advanced Micro Devices shares are trading more than 10% from their post-earnings highs as the stock retraced almost all the pre-earnings rally. This move has pulled shares away from their previously overbought conditions that held shares from rallying higher.
- AMD shares have a confluence of technical support under current prices as the stock’s 50- and 100-day trendlines are combining bullish forces at $12.75. This will be a point where the chart watchers turn into heavy buyers.
- Currently, less than 50% of Wall Street analysts have Advanced Micro shares ranked a buy. This number is likely to see some upgrades over the short-term as the technical picture shores-up.
Analog Devices, Inc. (ADI)
Analog Devices is still more than a month from making its earnings release and the stock is heading into technical trouble.
From the look of the current chart, investors would be wise to hold-off on hitting the “buy” button on ADI shares until we see some technical strength start to buoy the stock.
- Analog Devices stock is seeing a heavy dose of technical resistance just above $80 as the stock’s 50- and 100-day moving averages are combining for double-barreled resistance at that price.
- The 50-day moving average on ADI is now trending lower, which historically suggests that there is a 2:1 chance that each trading day will see the stock move lower on a regular basis.
- Traders should be eyeing the $76-level as a potential buying price as this is where Analog Devices’ 200-day moving average currently resides. A break below this trendline will target lower prices, but our research is indicating that there is a high likelihood that ADI will see a technical bounce ahead of its earnings report from here.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.