Big picture: Price graph for INTC from 1986 to present using MONTHLY candles. Note the dot.com parabolic move to the All-time High (ATH) of $75.81 and subsequent fall to much lower prices. I have indicated another price on the chart using the top of the 2001 bounce candle of $47.88. There is also a white rectangle shown surrounding a price consolidation zone from 2014 until late 2017. These landmarks will show up again in the next chart posted when we zoom into more recent price action, but I wanted to share the really big picture and history of this stock before talking about it.
The next chart is a WEEKLY chart of INTC from the white rectangle into this weekend in late April 2018.
Note the long consolidation of price between roughly $27 and $39 a share. In late 2017, price finally broke out of the price consolidation indicated by the white rectangle and has not looked back. Price bounced up right into the salmon line represented by the breakdown candle from 2001 at $47.88 (who says markets don’t have memories?) and retreated. Price struggled to overcome the $47.88 level until finally in 2018, it has pushed above. Please note the white ellipse around the MACD histogram at the bottom of the chart showing reduced momentum as price has wedged higher. While the histogram is still positive, unless price breaks above the teal wedge forming, a return to the origin of the wedge in the low 40’s is likely. Finally, a daily chart shows even more detail on the wedge price action since the breakout of the white rectangle consolidation.
Note how important the $47.88 price level has been from November 2017 to April 2018. INTC was initially rejected in November, rejected again in December, managed to gap above this level in January (on earnings), only to see price again fall below this $47.88 support during the early February 2018 sell-off. Since then, price has retested the January high, fallen back to test the salmon line, made new highs, retested the salmon line again, and just made new highs on Friday right near the top of the wedge (again, on earnings). That’s the history of price. I hope it has painted a picture of the INTC price action on a long term, intermediate term, and short term basis.
Since we trade in the near term, let’s concentrate solely on the daily chart just above. Price is clearly in a wedge pattern since November 2017. A breakout that is sustained above the wedge would be bullish for the stock and likely eventually target the ATH of nearly $76 a share. Conversely, a breakdown below the wedge would most likely receive some support from the $47.88 salmon line since it has been so important in recent price action. However, a wedge that breaks typically finds price falling to the lower base of the wedge, which puts price back in the low $40’s. And worst case scenario, INTC winds up entering the $27-$39 white rectangle price range again, but I would expect a bounce at $39 prior to that happening if price were to fall that far.
Dr. J’s Thoughts: Watch the teal wedge for clues as to where INTC is likely to trade next. Breaking out to the upside would indicate a potential “investor” BUY with an ultimate price target of $75+. A break down would target $48 first, $43 next, and finally $39 with ANY of those levels providing support for a price reversal to the upside. This could be a great stock to trade for intermediate time frame swing traders or options traders. Hope this helps a reader out there! And remember, this post is for informational purposes only, is not a trade recommendation, and you should carefully consider any action YOU choose to take in the market. I may or may not have a position open on this particular stock today or in the future, and I will not update you as to what I am doing personally regarding INTC. As of the writing of this blog post, I do NOT have a position in INTC as we are still within the wedge!