Intel Inc. (INTC) was reviewed near the end of August, where I wrote that "Aggressive traders could go long INTC on strength above $51 risking below $46, the recent low." INTC has not rallied above $51 but as the Real Money Stock of the Day we are taking a fresh look at the charts and indicators.
In the updated daily bar chart, below, we can see that INTC made a lower low in early September to "refresh" the downtrend. Prices bounced in mid-September and dipped slightly before rallying recently to a higher high ending the downtrend from early June. Prices have closed above the declining 50-day moving average line and Wednesday have tested the underside of the slightly rising 200-day moving average line. A bearish dead cross of these two averages can be seen in early August -- well off the June zenith.
The daily On-Balance-Volume (OBV) line shows a peak in late May and its decline suggests that sellers of INTC have been more aggressive than the buyers. The Moving Average Convergence Divergence (MACD) oscillator turned to the upside in September generating a cover shorts buy signal. The MACD oscillator is close to crossing above the zero line for an outright go long signal.
In the weekly bar chart of INTC, below, we can see that prices are below the cresting 40-week moving average line. The weekly OBV line has been in a neutral sideways range the past 12 months. The weekly MACD oscillator is below in the zero line in bearish territory but the two moving averages that make up this indicator have begun to narrow and could cross in the weeks ahead for a cover shorts buy signal.
In this Point and Figure chart of INTC, below, we can see that the computer program is projecting a downside price target of $41 but a rally to $51 is likely to generate further gains.
Bottom-line strategy: INTC has rallied about $6 recently. The chart has improved but the OBV line has not really soared -- buyers of INTC have yet to become aggressive. I will stand by my earlier recommendation to go long INCT above $51 but now the risk level is below $45.
