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by Arthur Hill
Intel failed to bounce along with the NASDAQ over the last two weeks, and relative weakness points to even lower prices ahead.
Position: Sell
Arthur Hill
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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Intel Remains A Drag
03/21/07 10:28:11 AMby Arthur Hill
Intel failed to bounce along with the NASDAQ over the last two weeks, and relative weakness points to even lower prices ahead.
Position: Sell
| On the daily chart (Figure 1), Intel (INTC) formed a big top from October to February and broke down at the end of February. The pattern looks like a head & shoulders of sorts with neckline support at 20. The breakdown occurred on high volume and the stock also moved below the 200-day moving average. The next big support level is around 17 from the June–July highs and this is the downside target. |
|
| FIGURE 1: INTEL, DAILY. INTC formed a top from October 2006 to February 2007 and then broke down at the end of February. |
| Graphic provided by: Telechart 2007. |
| |
| The bottom chart window shows the price relative, which compares Intel to the Standard & Poor's 500. The price relative peaked in October and foreshadowed weakness in the stock. In addition, the price relative broke down a few days before the neckline support break in the stock (blue circles). The price relative moved to a new low this month, and Intel continues to lag the broader market. Intel is still a tech gorilla, and weakness also weighs on the semiconductor indexes and the NASDAQ. |
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| FIGURE 2: INTEL, HOURLY. Examining the 60-minute chart may give clues as to whether there will be a bounce from oversold levels. |
| Graphic provided by: Telechart 2007. |
| |
| The only potential positive is that the stock became oversold after a 15% decline from mid-January to early March. This means there could be a bounce from oversold levels, and I am turning to the 60-minute chart for clues (Figure 2). The decline slowed at the beginning of March as the stock traded relatively flat. This caused the moving average convergence/divergence (MACD), a momentum indicator, to gravitate back to the zero line. Even though it may look the part, I would not consider this a positive divergence. Downside momentum turned flat and MACD just moved back to zero. This shows less downside momentum, not actual upside momentum. |
| To turn this stock around and trigger an oversold bounce, both MACD and INTC need to break above their March highs. As long as these highs hold, the current consolidation reflects a rest after a decline and further weakness is expected. |
Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.
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Date: 03/22/07Rank: 4Comment:
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