Challenges and uncertainties both on and off the price chart have made it a tough start to the trading week for the Dow Jones Industrials. But don’t let that prevent you from putting tech blue-chips Intel (NASDAQ:INTC), Cisco Systems (NASDAQ:CSCO) and IBM (NYSE:IBM) on your buy or watch list today.
After enjoying nice gains, narrowly missing fresh all-time highs and leaving May’s corrective sell-off even further behind, Wall Street has woken up to some obvious risks for bulls. Most pressing, of course, is this week’s G-20 meeting and its potential consequences where conflicts and trade wars between the U.S. and Iran and China are front and center.
There’s not much investors can do but wait and see what happens on the geopolitical front. And as anyone with a passing interest in the market knows, one way or the other that could impact the fortunes of tech blue-chip stocks INTC, CSCO and IBM.
And on the price chart of the Dow Jones, a fourth challenge of a high initially established in January 2018 is similarly offering investors an uncertain situation. Will the Dow chart resolve itself as a quadruple top? Or alternatively, will the fairly messy, but large basing pattern result in a meaningful upside resolution?
Again, it’s all speculation today. Still, being prepared with an open mind and go-to stocks for purchase in the event of easing political theater — or at least lesser technical threats for bulls — is important. And in today’s market, tech blue-chips Intel, Cisco and IBM deserve a spot on your watch list for purchase.
Tech Blue-Chip Stocks to Buy: Intel (INTC)
INTC stock is the first of our three tech blue-chips. Intel is enjoying a nice sympathy bid in Wednesday’s session following strong results and an upbeat forecast from Micron Technology (NASDAQ:MU). But it’s the monthly chart which has our attention.
Shares have been under pressure since establishing all-time highs back in April, but a stiff correction has led to INTC stock testing the top layer of a very substantial Fibonacci support zone. I believe there will be a bullish resolution, but for now it’s a name for the radar.
With today’s Micron-driven gains, Intel is facing some lesser resistance from its 200-day simple moving average and an ill-fated trendline from 2017. And with the monthly stochastics oversold but not yet showing evidence of firming, waiting makes sense.
For this tech blue-chip, I’d recommend buying shares on weakness nearer to support and the May/June bottom if some constructive divergence from the monthly stochastics develops. Alternatively, since I’m optimistic of a bottom for INTC stock and should the Dow breakout, an above-the-market purchase through $49.60 as the August 2000 high is cleared looks interesting.
Cisco is our next tech blue-chip that deserves a place on your buy or watch list. Technically, as we can see on the provided monthly chart, CSCO stock has been a laggard relative to the Dow Jones or the tech-heavy NASDAQ. But don’t let that weakness fool you.
There are a couple of good reasons to be upbeat on shares of Cisco going forward. Over the last couple months, this blue-chip has formed a high-level double bottom or “W” pattern at its 62% retracement level dating back to the Dot-com market bubble. It’s the kind of platform built for ushering in strong gains as pattern and Fibonacci resistance are overcome and as traders set their sights on the all-time-highs.
And technically, CSCO stock has already triggered a high-volume breakout of this bullish base as shares moved through $57.56.
My recommended strategy in CSCO stock is to wait for a second move through $57.56 to confirm the original pattern breakout. Opportunistically, I’d look to this tech blue-chip’s high of $65.08 from 2000 as a first target for profit-taking. I would, however, suggest an exit below $54.30 if required.
IBM is the last of our three tech blue chips. Unlike INTC stock or shares of Cisco, IBM hasn’t had any problems making fresh all-time highs since 2000 — or for that matter, the 2008-2009 financial crisis. But the past few years have seen this blue-chip’s fortunes languish.
As the monthly chart shows, an all-time high established back in 2013 has proven a durable obstacle for IBM stock. But the technical work done since that time does look very promising for bullish investors. Specifically, I’m upbeat on a couple of double bottoms which have formed and think they will eventually lead to new highs.
The larger of the two double bottoms is a two-year formation. This pattern completed in early 2018 and successfully tested key Fibonacci supports dating as far back as 1993 and the 200-month simple moving average. The smaller double bottom in this stock appears to be just finishing. The pattern extends from January’s bullish earnings gap to May’s test of the low of the post-earnings reaction.
For IBM stock, I’d put shares on the radar for purchase above $143.68. This entry is a breakout of the April pivot high. Conveniently, it also allows this tech blue-chip to clear downtrend resistance built over the past two years.
Investment accounts under Christopher Tyler’s management do not currently own positions in securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.