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Intel (NASDAQ: INTC) reported earnings back on April 14, and the company met the $0.41 earnings per share estimate analysts had established. Even though the company only met expectations, Intel stock was upgraded by one analyst firm and the price target for the stock was boosted by a total of five firms.
Even with the recent upgrade and the various price target increases, analysts are still pretty cautious toward the stock. There are 19 “buy” ratings, 19 “hold” ratings and eight “sell” ratings on the stock at this time.
While the earnings report and the upgrades got my attention, that isn’t what caught my eye in the first place. What struck me was the weekly chart for Intel. There was so much to look at and so many possible chart patterns that could play out on one stock. I was fascinated. The first thing I saw was the trendline connecting the lows from the last 2 ½ years.
After seeing the two dips down to the $29.25 area in October and again in March, I thought it could possibly be a double bottom trying to form – especially after seeing where the weekly slow stochastic readings had been and where they are now.
As I continued to look at the chart, I started to see a possible head and shoulders pattern forming, with the blue circles on the chart representing the various parts necessary to form the pattern. If we see the stock rally back up to the $35 area and then reverse, the pattern would then indicate that the stock would fall below the neckline that is in the $29.25 area.
So what do you do with Intel? With so many factors at play, there appears to be a plethora of trading options.
At this very moment I would say you wait to see what happens in the next week or so. If the stock makes it back up to the $35 area, you would then want to watch closely to see if it moves above that area or if it starts to reverse.
If the stock moves to $35.50 or higher, I think you buy the stock and look for it to move above the $38 level and higher. If it hits the $35 area and stalls, I think you sell the stock short or possibly buy puts on it. The $29.25 area could provide support once again, so if you short the stock or buy puts, you will want to pay particular attention if the stock gets down there again.
The other part of the chart that you will want to keep an eye on is the trendline. If the stock pulls back to the trendline and finds support from it once again, you will want to close any bearish bets and go long the stock or buy call options.
With so many possible outcomes and formations on one chart, I expect Intel stock to be more volatile in the weeks ahead.
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