With each earnings season comes an avalanche of corporate
news, and not coincidentally, an abundance of high-probability
trade setups. For my part, I like to wait for a company to report
its results, let emotions settle somewhat, and then see how the
news affected the charts.
#-ad_banner-#On Tuesday, semiconductor giant
) reported first-quarter earnings per share (
) of $0.38, which beat the consensus estimate by a penny. On the
top line, revenue of $12.8 billion was a touch below analysts'
estimates, but the company's gross margin came in a better than
expected at 59.7% versus 59%.
In terms of the outlook for the second quarter and full fiscal
year, nothing changed dramatically relative to Intel's previous
guidance or analysts' expectations.
After analysts had a chance to digest the news, the responses
were mixed. Morgan Stanley reiterated an "underweight" rating on
shares with a $24 price target. Goldman Sachs reiterated its
"sell" rating, while Jefferies Group raised its price target from
$32 to $35, giving it a "buy" rating. B. Riley & Co
downgraded the stock to "neutral" from "buy," but raised its
price target by $0.50 to $29.
If there is one investment theme over the past 12 months that
has caught analysts and traders off guard, it's been the
surprising strength of some of the old technology names like
Many of these stocks haven't moved much, relatively speaking,
over the past decade. But in the past year, they have again
reached (and in some cases, already surpassed) important
long-term areas of resistance on their respective charts.
Before looking at INTC's charts, let's look at the ratio chart
Market Vectors Semiconductor ETF (NYSE:
SPDR S&P 500 (NYSE:
INTC is the largest holding in SMH, representing 17.6% of the
exchange-traded fund, but not so large that it will completely
skew the ETF's direction. In other words, the strength that SMH
has displayed relative to SPY since last summer isn't just the
work of INTC, but rather a reflection of general strength in
As far as semiconductor stocks go, INTC is right in the middle
of the pack, and its charts show it is constructively positioned
for higher prices in the short and intermediate term.
The long-term chart below is the most bullish, as the stock
recently snuck back up to a 13-year resistance line. As they say,
the more a support/resistance line or moving average gets tested,
the weaker it becomes and the more powerful the eventual break of
it will be.
Also note the double bottom from 2002 and 2009, which further
strengthens the base and its attempt to break past the long-term
On the daily chart below, INTC continues working higher and is
again bumping into resistance dating back to the summer of 2012.
But this time it is assaulting the resistance line from a higher
low made in early February.
With earnings out of the way and the near- and long-term
charts looking constructive, INTC should soon be able to overcome
this lateral resistance line near $27 and work its way toward
Action to Take -->
-- Buy INTC on a daily close above $27.10
-- Set stop-loss at $26.30
-- Set initial price target at $29 for a potential 7% gain in
four to eight weeks
This article was originally published at
Old Tech Stock Likely to Keep Surprising Everyone on the
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