INTC Stock: Targeting All-Time Highs
The semiconductor sector has been the standout winner for 2016, as this unexpected sector has produced a mind-boggling 23.2% return year-to-date.
Intel Corporation (NASDAQ:INTC) stock is up 12.3% and is lagging behind a few of its peers. Lagging behind the benchmark index may seem worrisome, but I have reason to believe that Intel stock has only begun a run towards higher prices.
As an analyst and trader, I use technical analysis to systematically and objectively create investment strategies. The price chart is the only piece of data I need to begin my research. My views of a run on INTC stock are based on the data I was able to pull from the price chart. The INTC stock chart is both constructive and compelling. Given Intel stock’s low volatility and high liquidity, I would not find it difficult to develop an appropriate trading strategy.
The following Intel stock chart illustrates the big picture that has my piqued my interest.
Chart courtesy of StockCharts.com
The INTC chart above illustrates that aside from the blow-off top that occurred in late 1999 to early 2000, Intel stock was bound by the level of $25.00. This level proved to be tremendous resistance, as this level was tested on numerous occasions but the stock was unable to break this level for over a decade. In June 2014, the $25.00 mark was finally broken. A level that most Intel stock investors thought would never happen finally did. This event marked a major milestone that effectively turned a major level of resistance into a level of support and opened the door to much higher prices.
This new level level of support was reaffirmed when INTC stock traded back to this level to test it from above. Such trading action is common when a major price level is finally broken and traders refer to this price action as a backtest. In August 2015, the new level marked as support was effectively tested, and the trend toward higher prices resumed.
As it stands, the only other level of resistance that exists is the blow-off top that marked the dotcom bubble highs. This level stands at $53.27 and is the next logical target for INTC stock. From the current level, this represents a potential 40% return.
The following Intel stock chart supports a move toward higher prices that increases the odds that the all-time high will once again be tested.
Chart courtesy of StockCharts.com
The chart above illustrates how INTC stock has recently broken out of a consolidation pattern. Consolidation patterns follow price surges. These patterns are an area of temporary price equilibrium. Once the consolidation pattern is complete, the trend can continue or reverse.
In July 2016, NTC stock broke out of this consolidation pattern, signalling that the trend had once again resumed to the upside.
The moving average convergence divergence (MACD) indicator (in the lower panel of the chart) supported this move toward higher prices as it crossed in a bullish manner in August 2016.
MACD is a simple and effective trend-following momentum indicator. Signal line crossings are used to distinguish between bullish and bearish signals.
In June 2015, INTC stock generated a bearish MACD signal, and this effectively halted any sustained gains in the price, and confirmed the sideways trading action that defined the consolidation pattern. With this signal now confirming that bulls are once again in control, new 52-week highs are the order of the day, and my sights are set at a challenge of the all-time high.
The Bottom Line on Intel Stock
I am bullish on Intel stock and the semi-conductor sector as a whole. The charts provided above suggest that a test of the all-time high set in the dotcom bubble is the next level that is set to be tested in the future. My bias on INTC stock is based on the signals generated from the price chart, and my bias will continue to be bullish until the charts produce a signal that warrants a change of view.