Conditions in the market have quickly gone from utter fear to unadulterated cheers. Yet, when it comes to Intel (NASDAQ:INTC), I’d caution bullish investors what’s gone up on the Intel stock chart, is also likely to come back down. Let me explain.
From May’s pervasive and hard-hitting market correction and its attached-at-the-hip trade war concerns, Wall Street has gotten a case of the proverbial giggles in June. The upbeat shift has the S&P 500 hitting new all-time-highs Thursday. But when it comes to Intel stock and its chances for similar celebrations, investors shouldn’t hold their breath just yet.
Buoyed by strong earnings and fresh highs from tech giant Oracle (NYSE:ORCL), broker-driven technical leadership from Microsoft (NASDAQ:MSFT), a bid in oil and FOMC follow-through, the broader market has its share of reasons for setting new records. The same, however, can’t be rightfully said about Intel stock.
Shares of INTC have rallied this month alongside the market’s own bid. In fact, Intel stock is up about 8% compared to the S&P 500’s own gain of just over 7%. But I’m afraid that’s as good as it gets for the chip giant right now.
I’d caution competitive threats from Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA) reinforced during Intel’s analyst day last month and April’s bearish outlook point to a challenging company-specific business environment that shouldn’t be dismissed so quickly. And even if you are a contrarian and see the upside in Intel stock’s current situation, a quieted but still lurking trade war threat could become an even larger enemy of the state for INTC.
Intel Stock Weekly Price Chart
Don’t get me wrong, I’m not warning of Intel stock’s demise and I’m certainly not bearish on its price chart. The provided well-detailed weekly view of Intel stock shows an abundance of Fibonacci and trend-lines spanning decades that continue to back the uptrend in shares. And INTC shares have moved favorably over the past month in appreciation of those technical supports.
At the May bottom, Intel stock formed a bullish higher double-doji-pivot low backed by a flatter trendline developed over the past 18 months. The reversal also successfully tested the uppermost layers of a massive Fibonacci price band. And with stochastics sporting a supportive-looking oversold crossover, there’s a lot to like on the INTC price chart going forward.
But that doesn’t mean buying Intel stock today is a good investment, even if you are a bullish contrarian.
The current rally coupled with Intel stock’s overall weakness of the past few months has shares testing resistance from prior trendline support dating back to 2017, as well as the 200-day simple moving average. It’s enough of a technical barrier, that in conjunction with Intel’s business risks, my recommendation is investors take a wait and see approach for the time being.
If shares pull back in the coming couple of weeks and confirm the May low, buying Intel stock as a contrarian position prior to late July’s earnings makes sense. I would, however, advise exiting before or after the report, if May’s bottoming pattern is broken by more than 1%. If that possibility becomes a reality, it’s my view the risks increase exponentially that an out-of-favor INTC could be facing even bigger challenges off and on the price chart in the months ahead.
Disclosure: Investment accounts under Christopher Tyler’s management currently own positions in Advanced Micro Devices (AMD) and its derivatives but no other 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.