Intel's Fuse Awaits Spark

Updated from 6:54 a.m. EST

Intel(INTC) shares are once again on the verge of breaking above $25, which until this week represented an eight-month high that the stock had failed to breach on several occasions. The company's midquarter update after the bell Thursday should help to determine whether the stock will continue to dance around this level or surge to higher ground.

Though the stock of the world's largest chipmaker is up 11% since the beginning of February, it's the movement of the past week that finds the shares once again at this interesting level. Intel finally closed above $25 on Monday and traded above that level during each of the past four sessions. The shares had attempted to top $25 four times -- in early August, mid-November, mid-December and mid-February -- only to pull back. It rose 10 cents to $24.94 early Thursday.

"The stock has been absolutely dead, but it seems people are now edging in," said Bill Priebe, co-president of Geneva Capital Management.

Thursday's update on the company's first-quarter financials will undoubtedly be a key catalyst in deciding whether investors do more than kick the stock's proverbial tires.

So far, options speculators are treating Intel's update in a fairly timid fashion, said Alison Regan, capital markets associate with Susquehanna Financial Group. She said options traders have been mostly selling options around the $25 strike price; the same trend can be seen in options on the Philadelphia semiconductor index and the Semiconductor HOLDRs(SMH).

"Generally, this suggests a nonevent," she said. "This isn't bearish; it just shows that people don't think the stock will move much, and they might be trying to get some premium."

Intel has previously forecasted that its first-quarter sales would come in between $8.8 billion and $9.4 billion -- a sequential drop of 2% to 8.3% compared with an average sequential decline of 5% to 7%. Gross margins were predicted at 55%, down from 56% in the fourth quarter. (Intel doesn't provide expectations for its bottom line.) The first quarter is typically the weakest quarter for Intel and other semiconductor manufacturers, as consumers take a break from spending splurges in the fourth quarter.