With wars of all types escalating for Intel Corporation (NASDAQ:INTC), is now a good time to purchase shares? Let’s examine what’s going on off and on the price chart and what a risk-adjusted buy of INTC might look like inside your portfolio.
It’s October and often enough, that’s sufficient for investors to tread more cautiously. And like clockwork 2019 has been a tough period for risk assets. At its worst, a 4% decline in the broad-based S&P 500 and the market barometer remaining firmly underwater may feel more than a bit like 2018’s October stumble which turned into a terrible fourth quarter. Unsurprisingly, INTC stock hasn’t proven immune.
Shares of Intel are off roughly 4.25% for the month. At its weakest INTC stock was off by nearly 6%. Blame it on what you will. From impeachment proceedings, weak economic data stateside and abroad or an escalating trade fight with our European allies, there has been no shortage of reasons to unsettle Wall Street bulls.
Now INTC has other escalations to navigate. The drawn out U.S.-China trade war has ramped up yet again. On Tuesday the Trump administration announced it has blacklisted eight Chinese tech companies on human rights violations against Muslim minorities. None of the sanctioned companies are publicly-traded in the U.S. Still, with as much as one-third of the global video surveillance market and the world’s most valuable artificial intelligence startup backed by tech giant Alibaba Group (NYSE:BABA) at risk, big stakes are obviously involved.
And with high-level talks between the two countries to begin Thursday in Washington, reasonably tough conditions for Intel stock and other semiconductor companies have been magnified to say the least. And Intel has other battles to fight too.
A trade war of sorts has intensified with rival Advanced Micro Devices (NASDAQ:AMD). Intel’s just launched X-series HEDT (high-end desktop processor) is priced at half of its predecessor. The release of the sub-$1000 model is in an aggressive challenge to AMD’s increasingly strong positioning within the CPU market which has grown at the expense of Intel on the back of its successful price-to-performance strategy.
It remains to be seen if the new game the world’s largest semiconductor manufacturer is now playing against AMD stock will work. Some clarity is likely in a couple weeks. Investors should expect updates on Intel’s plans and outlook when the company releases earnings on Oct. 24. Right now though, there’s little arguing this financially-sound titan sports a below-the-market multiple, pays investors a well-funded 2.56% dividend and also maintains a price chart with a promising forecast for capital gains for INTC shareholders.
INTC Weekly Chart
Last month in an article at InvestorPlace I went into detail on how to purchase INTC stock after shares successfully completed a shallow test of a significant support zone dating back to the financial crisis over ten years ago. Price action in Intel has continued to support the described higher low pattern within the near two-year long bullish up-channel. But within that technical framework an overall decline in shares since the article has formed a nice-looking four-week pullback for buying INTC stock.
Today’s recommendation is to use last week’s engulfing weekly chart hammer candlestick for entering into a position. Confirmation rests with INTC rallying above $52.24 while maintaining the low of the weekly signal candlestick.
The initial upside target for taking profits in INTC stock would be a new high as shares challenge $60 and channel resistance. But what about containing downside exposure? A failure of shares to hold above the engulfing candlestick wouldn’t be good. Worse, a breach also puts the integrity of the larger up-channel at risk as Intel shares would be back beneath the dividend-adjusted August 2000 high. As much, our prior stop-loss of $48.45 which is eight cents beneath the hammer low of $48.53 is still advised as an appropriate exit.
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.