Intel (INTC - Get Report) will report earnings after the closing bell on Thursday with the stock trading back and forth around its quarterly pivot at $57.57, which was its price target. Investors should reduce holdings if the stock opens on Friday below $57.57. Next week there will be a risky level at $60.44, the level at which to sell Intel on strength.
Intel is a component of the iShares PHLX Semiconductor ETF (SOXX - Get Report) , which set an all-time intraday high of $218 on Wednesday and it too is above its quarterly pivot at $207.09. Both Intel and SOXX have extended momentum readings as "inflating parabolic bubbles."
Intel has always been a benchmark stock. The stock is a component of the Dow Jones Industrial Average, the S&P 500 and Nasdaq Composite making it an important stock to follow. Intel is one of the old-time tech stocks that lags its tech-bubble peak which was $75.81 set in August 2000.
The SOXX has been helping the Nasdaq Composite and Nasdaq 100 set new all-time intraday highs, which are 8,151.84 and 7,851.97, respectively, set at Thursday's open. No other major equity averages have set new all-time intraday highs in 2019.
Analysts expect Intel to earn 87 cents per share when the company reports earnings after the closing bell on Thursday. The company has a 20-quarter winning streak on the line in beating earnings-per-share estimates. The stock is reasonably priced with a P/E ratio of 12.81 and dividend yield of 2.14%, according to Macrotrends.
Analysts indicated that Intel made the decision not to launch 5G modem products due to the Apple (AAPL - Get Report) and Qualcomm (QCOM - Get Report) truce. They will still focus on 4G and 5G modems for PCs and the "Internet of Things." Another issue is reduced focus on autonomous vehicles including some layoffs.
The Daily Chart for Intel
Courtesy of Refinitiv XENITH
The daily chart shows that Intel has been above a "golden cross" since March 6, when the 50-day simple moving average rose above the 200-day simple moving average to indicate that higher prices would follow. This signal was in play when the stock set its 2019 high of $59.59 on April 17. The stock traded as low as $43.51 on Dec. 26 which turned out to be a "key reversal" as the stock closed that day at $46.19 above the Dec. 24 high of $45.17. The Dec. 31 close of $46.93 was an important input to my proprietary analytics. Still on the chart are its semiannual value level at $43.13 and annual value level at $49.60. The close of $53.70 on March 29 was another important input to my analytics. This resulted in a monthly value level for April at $51.08 and its quarterly pivot at $57.57. Next week's risky level is $60.44.
The Weekly Chart for Intel
Courtesy of Refinitiv XENITH
The weekly chart for Intel is positive but extremely overbought with the stock above its five-week modified moving average of $55.14. The stock is well above its 200-week simple moving average or "reversion to the mean" at $39.92. The 12x3x3 weekly slow stochastic reading is projected to end the week at 91.58 well above the 90.00 threshold defined as an "inflating parabolic bubble."
Trading Strategy: Buy weakness to my monthly value level at $51.08 and reduce holdings on strength to the weekly risky level at $60.44. If the stock is below its quarterly pivot at $57.57 at 4:00 PM today odds favor a negative reaction to earnings. Long-term investors should consider reducing holdings given a close on Friday below $57.57.
How to use my value levels and risky levels:
Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of January, February and March. The quarterly level was changed at the end of March. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.
How to use 12x3x3 Weekly Slow Stochastic Readings:
My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years. The stochastic reading covers the last 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best. The stochastic reading scales between 00.00 and 100.00 with readings above 80.00 considered overbought and readings below 20.00 considered oversold. Recently I noted that stocks tend to peak and decline 10% to 20% and more shortly after a reading rises above 90.00, so I call that an "inflating parabolic bubble" as a bubble always pops. I also call a reading below 10.00 as being "too cheap to ignore."