Intel (INTC) is trading lower Wednesday as fundamental analysts cut their estimates of the company following management commentary. Prices have not sunk to a new low in price so I view the price action as positive. Let's check the charts.
In this daily bar chart of INTC, below, we can see that prices have been in a downward trend for the past 12 months. INTC trades below both the declining 50-day moving average line and the declining 200-day line.
The On-Balance-Volume (OBV) line shows weakness into early May but recently we are seeing a sideways movement in this indicator. This is a subtle clue of a shift from aggressive selling to aggressive buying.
The Moving Average Convergence Divergence (MACD) oscillator has been improving since late May but is still below the z
ero line.
ero line.
In this weekly Japanese candlestick chart of INTC, below, we can see some improvement. Prices are in a downtrend but we can see lower shadows below $42 telling us that traders have begun to reject the lows.
The OBV line made a low in November and has moved higher in the face of weak price action. The MACD oscillator is bearish but has narrowed towards a cover shorts buy signal.
In this daily Point and Figure chart of INTC, below, we can see a downside price target of $30 but a trade at $40 or lower is needed to refresh the downtrend.
In this weekly Point and Figure chart of INTC, below, we can see the same $30 price target.
Bottom line strategy: I learned early in my career to pay attention when a stock or commodity did not go lower on bearish news - this was a sign that the news was already discounted. This is how I view the price action on INTC today. Traders could wait a couple of days but I do not expect INTC to make a new low close for the move down. A recovery rally back towards $48 is possible within the long-term downtrend. This is just a short-term trade for nimble traders.
