Shares of Intel Corp. (INTC) are down sharply this Friday morning. Thursday night the company reported an EPS and revenue beat but told investors that its 7-nanometer chip process is delayed. Several fundamental analysts have downgraded the stock and prices opened with a gap lower.
Let's check and see what this has done to the charts and indicators.
In the daily bar chart of INTC, below, we can see that the shares have been largely trading sideways the past four months. INTC has been crossing above and below the 50-day moving average line but it has stayed above the rising 200-day moving average line. Successful tests of the 200-day line can be seen the past three months. Now the support from the 200-day moving line vanished. The traders that bought at the 200-day line will probably become resistance if or when prices get back to that area again.
The On-Balance-Volume (OBV) line has been neutral to bearish the past three months and the trend-following Moving Average Convergence Divergence (MACD) oscillator has been weakening since April and was already below the zero line for an outright sell signal. The lows from March in the $50-$46 area may provide some support.
In this daily Point and Figure chart of INTC, below, we can see Friday's decline without the price gap. This chart is projecting a potential downside price target in the $45 area.
Bottom-line strategy: The weak product guidance and various analyst downgrades are probably going to keep some investors sidelined for a while. Traders should wait for a bottom reversal pattern before trying to probe the long side.