INTC Stock: Testing the Trend
Intel Corporation (NASDAQ:INTC) stock is testing a very important level of price support. INTC stock’s ability to hold above this key level of support will dictate whether Intel stock will continue its advance towards new 52-week highs, or whether a deeper correction is set to ensue.
Other semi-conductor names have been experiencing some selling pressure and, as a result, my attention is keenly focused on this current level of price support.
For anyone who hasn’t had the pleasure of reading any of my previous publications, my investment views are generated using technical analysis. This method of analysis is based on the notion that historical price and volume data can be used to discern a price trend and forecast future prices. I have been using this method for nearly two decades, and have gained a level of proficiency in analyzing a price chart.
The following Intel stock chart illustrates the important level of support that INTC shares are currently testing.
Chart courtesy of StockCharts.com
Since lows were established in February 2016, a bullish trend has developed. This advance contains the quintessential characteristic of a bullish trend: a sequence of higher highs and higher lows. This characteristic creates the classic price chart that begins in the lower left and ends in the upper right.
This bullish trend is easily defined by using a simple uptrend line. This uptrend line is created by connecting the troughs on the price chart and, not only defines the trend, but also acts as a level of price support. This trend line has been tested numerous times, and buyers consistently step in to buy shares of Intel stock at this prevailing level.
This trend line also serves as an indicator and, as long as INTC stock is trading above this uptrend line, the trend is bullish and higher prices can be expected. If Intel shares close below this trend line, it would serve to suggest that the bullish advance has concluded, and that a larger correction is set to ensue.
INTC stock is currently testing this trend line level from above and, as a result, the bullish trend is being put to a test once again. The 200-day moving average currently coincides with the level of support defined by the uptrend line. The 200-day moving average is the dividing line between stocks trading in a bull market and stocks trading in a bear market. When the share price is above the moving average, it is bullish. When the share price is below the moving average, it is bearish. In a bull market, it is not uncommon for stocks to find support on this moving average.
The indicators that are suggesting levels of price support are currently coinciding around one price point. This convergence reinforces the notion that support at this level is both strong and significant. In order for Intel to maintain its bullish stature, the stock price must remain above these coinciding levels of price support.
The big picture is bullish, and it serves to reinforce the notion that a bull market in Intel stock is still in progress. The following price chart illustrates the developments on a longer-term time frame that supports higher stock prices.
Chart courtesy of StockCharts.com
The price action on the chart above can only be described as bullish. This bullish view is created by the constructive price action that encompasses the stock chart.
Bullish constructive price action consists of a two-wave structure. This two-wave structure consists of an impulse wave, whose primary objective is to advance the stock price in a linear motion, and a consolidation wave, whose primary objective is to unwind overbought conditions and set up the next impulse wave.
On the INTC stock chart above, the impulse waves are highlighted in green, and the consolidation wave is highlighted in purple.
In July 2016, Intel shares completed the consolidation wave by exiting the pattern in an upward direction, suggesting that a new impulse wave is in development. The moving average convergence/divergence (MACD) indicator located in the lower panel has been instrumental in identifying the identity of the current wave that is in development. MACD is a simple and effective trend-following momentum indicator that uses signal-line crossings to distinguish between bullish and bearish momentum.
In November 2013, a bullish MACD cross was generated, which indicated that bullish momentum was propelling Intel shares. As a result, the path of least resistance was geared toward higher prices. This indicator effectively confirmed that an impulse wave was in development.
In May 2015, a bearish MACD cross was generated, indicating that bearish momentum was propelling INTC shares. As a result, the path of least resistance was geared toward lower prices. Once again, this indicator confirmed that a consolidation wave was in development.
In August 2016, a bullish MACD cross was generated. All the bullish implications that were involved in the previous bullish cross still stand, and higher stock prices are expected as a result. This view is contingent on Intel shares remaining above the uptrend line. The signal lines that are used to create the bullish MACD cross are converging. Remaining above the uptrend line would suggest that the stock price will advance and that the MACD indicator will remain engaged in a bullish manner.
Bottom Line on Intel Stock
I am currently bullish on Intel stock. This view was generated using indications on the INTC stock chart and, as a result, this bullish view is contingent on Intel shares remaining above key levels of price support.