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Intel Corp.'s Trading Range Breakout

10/06/03 08:07:52 AM
by Kevin Hopson

Intel Corp. appears to have broken out of its second bullish trading range in two months but a move above the $30.00 level is still needed to confirm this.

Security:   INTC
Position:   Hold

Intel Corp. (INTC) broke out of a one-month trading range (or bullish rectangle formation) in mid-August, which indicated higher prices in the short-term. Since then, the stock has continued to rally, thus confirming the initial breakout. Coincidentally, Intel has formed another trading range over the span of the last month-and-a-half. In fact, the stock appeared to breach the top of its trading range (or a quadruple top) around the $29.00 level on Friday. Does this mean that Intel is ready to move higher again?

To help answer this question, we need to take a step back and look at the big picture. For example, by analyzing the prior trading range breakout, you will see that Intel has met a key short-term price target. More specifically, notice how the stock tested the upper channel line twice before breaking out. If you take this number (2), multiply it by the width of the trading range ($25.50 - $23.50 = $2.00) and add it to the bottom ($23.50) and upper ($25.50) channel lines, you come up with a potential price target of $27.50 to $29.50.

Graphic provided by:
As you can see in the chart, Intel recently met the upper end of this price target. Additionally, the top parallel line of the purple pitchfork - which is converging around the $30.00 level - is now acting as resistance. As a result, Intel needs to thrust through the $30.00 level on above-average volume to confirm last Friday's trading range breakout. If Intel is successful in doing this, I would look to go long the stock. Also, the trading range breakout (if confirmed) would indicate a potential upside target of between $32.50 and $34.00.

Kevin Hopson

Kevin has been a technical analyst for roughly 10 years now. Previously, Kevin owned his own business and acted as a registered investment advisor, specializing in energy. He was also a freelance oil analyst for Orient Trading Co., a commodity futures trading firm in Japan. Kevin is currently a freelance writer.

Glen Allen, VA
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Date: 10/07/03Rank: 4Comment: 
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