Shares of Intel Corporation (NASDAQ:INTC) since my last bullish note are higher by more than 12%, bringing its year-to-date move to more than 22%. While I continue to like the story in the stock, in the near-term INTC stock is once again reaching overbought conditions of epic proportions.
On Oct. 9 in this column I offered that INTC stock is one that I like into year-end and that the $45 area would be a reasonable price target. Much to my pleasant surprise, INTC stock last week reached this upside price target — two months early.
One of the cornerstones of my research and decision-making process in trading and investing around single-name stocks is to take into consideration any relative strength of weakness of the stock versus its peers or industry group or sector.
To wit, I updated a chart that I initially showed on Oct. 9 where I plotted INTC stock versus the semiconductors as a group as represented by the VanEck Semiconductor ETF (NYSEARCA:SMH). At the time I pointed out a marginal relative strength signal on the part of INTC stock, which since then has turned into a full blown breakout. While through this longer-term lens INTC stock may indeed just be getting started on a relative strength rally, for the near-term this looks to have been sufficient.
INTC Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
A quick look at the longer-term chart of INTC stock itself shows that the most recent rally has pushed it out and above its multiyear up-trending channel.
At the same time, from a momentum perspective in this time frame more upside is surely possible, which would also line up with more potential on the relative chart.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
For right now however and through the lens of sound risk management, INTC stock on its daily chart is reaching epic overbought readings, for example from its MACD momentum oscillator at the bottom of the chart.
Also note that the most recent blast higher in the stock now has the stock since the June lows traveled the same distance higher as it did from the 2016 lows to the 2017 highs, but in a much shorter time period, i.e. about four months compared to eight months.
In summary, while INTC could have further upside into year-end, right here right now is not the time to chase it higher. The stock must consolidate first before a better reward to risk entry opens up again.
Check out Anthony Mirhaydari’s Daily Market Outlook for Oct. 31.
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