We reviewed Intel Corp. (INTC) less than a month ago, and the stock looked very strong. We summed up our thinking this way: "The bulls are in control. INTC is pointed up. Traders and investors should write these targets down in their trading ledger -- $50, $54.62 and then the $73-$75 area. Traders could raise their sell stops to a close below $44." Almost as quickly as the December rally started, it ended. Let's take a fresh look at the charts and indicators on this member of the Dow Jones Industrial Average (DJIA).
In this daily bar chart of INTC, below, we can see that at the beginning of the year the stock quickly dropped below the 50-day moving average -- maybe faster than the ball in Times Square! Prices stabilized/bounced a couple of sessions, but failed to break back above the 50-day line.
INTC has continued to weaken and has closed below the December low. The 50-day average line is now peaking. The daily On-Balance-Volume (OBV) line peaked with prices in mid-December and is pointing lower, which quickly tells us that sellers of INTC have become more aggressive -- volume on down days has been heavier than on up days.
The Moving Average Convergence Divergence (MACD) oscillator has turned down (again) and is close to crossing below the zero line for an outright sell signal.
In this weekly bar chart of INTC, below, we can see some technical erosion or weakness. Prices are still above the rising 40-week moving average line, but the weekly OBV line has made a lower low on the chart and tells us that on this timeframe sellers are more aggressive. The weekly MACD oscillator is crossing to the downside for a probable take profits sell signal.
In this Point and Figure chart of INTC, below, we can see the breakout, or new low at $42.65. The chart indicates a potential downside price target of $39.10.
Bottom line -- with the close below $44 on INTC, traders should be flat. INTC may or may not decline to $39, with some minor chart support around $40. The best strategy right now would be to let others step up and buy INTC. When support materializes, we can take another look at this Dow component.