INTC Stock: All-Time Highs on the Horizon?
I remember the dot-com bubble like it was yesterday; becoming an instant millionaire required owning the right tech stock. Intel Corporation (NASDAQ:INTC) stock was one of those names that graced media headlines. Janitors and deliverymen who worked at these aspiring technology corporations became instant millionaires, through their “401(k)” retirement savings plans. This became the American dream, and a mania ensued as investors clamored to buy technology stocks, such as Intel stock.
In the early 1990s, INTC stock could have been bought for under a dollar; 10 years later, share price hit an all-time high of $53.12 in August 2000. This represented a 4,900% return, which is approximately 47.5% compounded. Not even the infamous Warren Buffet could compete with returns like this. It was this type of rhetoric that inflated and then popped the dot-com bubble. Intel stock fell from its all-time high in meteoric fashion, hitting a low of $9.13 in October 2002.
It has taken many years for investors to get over the fallout that followed. Intel stock has recouped a great deal of those losses, and I believe the stock is setting up to stage an assault to challenge the all-time highs that were set in August 2000.
The following chart illustrates the pattern that INTC stock formed after the dot-com bubble burst.
Chart courtesy of StockCharts.com
INTC stock spent 13 years—from 2001 to 2014—forming a “base.” A base is a period in which price directions is muted in both upward and downward direction. The base formed a trading range where support was marked at $10.00, and resistance was marked at $25.00. The longer it takes for a base to develop, the more significant it becomes.
In, 2014, that base was finally broken on the upside, and the directionless trade that defined INTC stock was no more. This event signalled that the trend for Intel stock was now upwards. The range that dominated the base can also be used to set a preliminary price target. Using the range of $15.00, I get a price target of $40.00.
It is not uncommon for share price to trade back to test a previous area of resistance. In 2015, INTC stock traded back to test the previous area of resistance at $25.00. The back test was successful and $25.00 is now a new level of support. There is some minor resistance at $36.00, but major resistance lies at the all-time high of $53.12.
The following chart supports the premise of a higher INTC stock price.
Chart courtesy of StockCharts.com
INTC stock has set up an ascending triangle over the last two years. These patterns tend to resolve themselves in a bullish direction. These patterns are defined by a horizontal level of resistance and an upward sloping level of support. This pattern is also useful in generating a price objective. Extrapolating the widest part of the triangle above the resistance line gives a preliminary price objective of $48.00.
Triangles are useful pattern and, on average, signal a continuation of a trend. A break above $36.00 would signal higher prices and would reinforce my belief that INTC stock is heading higher.
The Bottom Line on INTC Stock
INTC stock has set up numerous patterns that are projecting higher prices. If price can break above $36.00, there is little in terms of resistance, and a test of the all-time highs becomes more likely. The 13-year base is a significant price pattern; if Intel stock were to trade back within the base, I would be greatly concerned and would instantly change my bias.
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