Intel Stock: Patience Has Its Rewards
In November 2016, I published a report on Intel Corporation (NASDAQ:INTC) stock, illustrating that the bullish developments that were generated earlier in the year were being put to the test. This test was spurred on by a disappointing earnings quarter that sent Intel stock trading lower.
The good news that I shared in that report was that this test was in the context of being constructive, which meant that as long as INTC stock remained above key levels of support, this sell-off would only act to reaffirm the larger bullish pattern that was completed earlier in the year.
My views so far have not been ill-founded, because Intel stock managed to stay above the level of support that was outlined, and a constructive price rally has ensued. This rally has the potential to follow through on this initial surge in price that first suggested that a bullish view was warranted on INTC stock.
The following Intel stock chart illustrates the pattern that first suggested that a bullish view was warranted.
Chart courtesy of StockCharts.com
The bullish pattern that first suggested a bullish view was warranted is highlighted on the INTC stock chart above. This bullish view developed after a consolidation pattern was completed when the price exited it in an upward direction.
Consolidation patterns act as midpoints where the price is digested and the setup for the next move in the price takes place. Exiting the pattern to the upside suggests that an advance in the stock is set to develop.
This advance in Intel stock was also suggested by the moving average convergence/divergence (MACD) indicator in the lower panel of the chart. MACD is a simple and effective trend-following momentum indicator. Signal-line crossings are used to distinguish between bullish and bearish signals. The bullish cross that occurred in August 2016 indicates that bullish momentum has overwhelmed any bearish momentum and, as result, stock is set to rise.
The price has yet to rise, but INTC stock has returned to backtest the consolidation pattern from above, and as long as the price remains above key levels of support, this type of price action only serves to reaffirm a bullish view.
The minute problem that exits is that the price has yet to follow through on the initial surge in price that completed the consolidation pattern. In order for this bullish pattern to be confirmed, Intel stock needs to follow through by surpassing the previous high of $38.00.
I have good news to share because the following INTC stock chart suggests that such a feat is just on the horizon.
Chart courtesy of StockCharts.com
The price action off the December lows is extremely constructive. This constructive price action consists of an impulse wave that has taken INTC stock from $33.50 to $37.25 in short order. The consolidation wave that followed is unwinding any of the overbought conditions that have developed, and is setting up the next impulse wave.
The theory behind impulse waves that are separated by consolidation waves is that once the consolidation wave is complete, a new impulse wave is set to develop. The new impulse wave has a tendency to mirror the initial impulse wave in length. So, if INTC stock exits the consolidation wave in an upward direction, it would suggest a potential price objective of $40.00. This objective is above $38.00, and it would confirm the bullish view suggested by the consolidation pattern in the first chart provided above.
Bottom Line on Intel Stock
I am still bullish on Intel stock, awaiting the price surge that was first suggested by the completed consolidation pattern on the INTC stock chart. The recent price action suggests that my waiting may soon come to an end.