Following a mixed earnings report and promises that have come up short prior, it may be tough to defend Intel (NASDAQ:INTC) stock. But if your horizon is on the intermediate term, the big picture in Intel stock continues to look favorable.
Let me explain.
Let’s just say Friday could have been better for INTC stock bulls off and on the price chart. The chip giant posted Q4 and full-year results that saw 13% year-over-year top-line growth, an operating profit of nearly 37% and a 20.6% sales increase for Intel’s data center group. That’s the good news.
Unfortunately, the aforementioned line items were far from sufficient as investors took Intel stock down almost 5.5% to end the week.
Behind the pressure, Intel’s upbeat-sounding results still fell short of consensus views. For one, data center group revenues of $6.07 billion came in well below the company’s own forecast of $6.3 billion. Another sticking point for bulls, with Chinese chip demand being an ongoing issue and cloud providers still digesting capacity, was that INTC stock’s management had to ask Wall Street for a bit of patience. That’s not good news.
Intel has unfortunately earned a reputation for having a spotty track record when it comes to guiding investors through rough patches. On Friday, management was back at it. Investors were asked to look past an expected difficult first-half in 2019 and towards a stronger operating environment in the back-end of the year after the release of Intel’s Cascade Lake data processor.
But what will tomorrow actually bring? While some on Wall Street are obviously shunning INTC stock right now, at the end of the day, week, month or year — nobody knows for certain what will happen. Intel could, in fact, be setting the bar low, as was the case in 2018 with its data center business. And if investors are willing to use Intel’s long-term trend that has been good for appeasing bulls on the price chart in the past, then conditions are shaping up already.
Intel Stock Weekly Price Chart
Since eclipsing its former all-time-high from 2000 in early 2018 and hitting a new benchmark of $56.87 last June, INTC stock has corrected by roughly 25%. In of itself and for a large-cap of Intel’s size, the decline is a fairly healthy one and overall a positive for bulls looking to buy shares on weakness. But that’s not all.
By the time the broader market began its own correction in October, shares of Intel were busy putting together a doji-style hammer and forming a possible bottoming candlestick. The bullish pattern received confirmation of a low in December, but thus far have failed to make any headway and are trading inside the October candle.
For traders betting on a quicker resolution to the upside, INTC stock’s meandering has likely been frustrating. But the fact of the matter is that Intel has continued to hold the low and one backed by a couple Fibonacci supports from 2015 and 2017, as well as its long-standing uptrend line. And now INTC is showing an oversold stochastics setup on the cusp of forming a bullish crossover.
Buying Intel Stock
My recommendation for buying into the uptrend in Intel stock would be to put shares on the radar for a move back above October’s hammer high of $49.41. A trigger at this price level and given the difficulty of the past couple months, it would likely be a strong sign shares are reasserting themselves for a longer-term move higher.
Alternatively, and as the monthly chart also shows, there’s plenty of price support for INTC stock all the way down towards $36.50 based on our trend-line and Fibonacci analysis. That’s a fairly wide support zone with room for shares to move substantially lower. As such, if the current pattern does fail in the coming days, weeks or months, investors should let it happen, but stay ready to buy into an even stronger and more well-supported trend entry.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any 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.
