Shares of Intel Corporation (NASDAQ:INTC) have a 2% rally year-to-date. This stands despite the fact that semiconductors as a group and represented by the VanEck Semiconductor ETF (NYSEARCA:SMH) are higher by nearly 29% and that INTC stock with about 9% weight is the second-largest holding of the SMH ETF. INTC stock looks ripe to start playing some catch up.
Over the past week or so in this column, I have continually highlighted the renewed emerging relative and absolute strength from semiconductor stocks, which are further supported by a still bullish technology sector.
Semiconductor stocks such as Nvidia Corporation (NASDAQ:NVDA) and others woke up with a vengeance in recent days after the SMH ETF already showed early warning signs of breaking higher early last week.
INTC Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
While semiconductor stocks generally have been going higher all year, INTC stock has seen a much choppier going. While the broader multiyear up-trend remains intact for the stock, for the year-to-date it has been in a sideways shuffle.
At the bottom of the chart, I created a ratio chart where I divided INTC stock by the SMH ETF, and the descending blue line shows that while the year-to-date relative underperformance of INTC stock has been a trend for multiple years, it has reached new lows this year.
Moving averages legend: red – 200-day, blue – 100-day, yellow – 50-day
On the daily chart, we see that despite the lack of real upside performance thus far in 2017, INTC stock does have a few notable technical things going for itself. First, note the well-defined black diagonal resistance line that the stock is now marginally pushing above. Also note that the price action since May could arguably have traced out a so called bullish “inverse head and shoulders pattern.” And thirdly, note that the stock’s medium-term moving averages are closely coiled together, which, given the aforementioned two bullish constructs, could add further fuel to a bullish breakout through a multiweek/month lens.
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In the immediate term, after a 7% rally over the past two weeks INTC stock is arguably immediate-term overbought. However, some backing and filling around the $36-$37 area could ultimately get the stock coiled again and moving well higher in coming weeks/months toward the $39-$40 area.
Check out Anthony Mirhaydari’s Daily Market Outlook for Sept. 19.
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