Intel Weekly Chart Shifts to Positive After Upgrade

Buy Intel on weakness to its semiannual and annual pivots at $57.37 and $57.17 and reduce holdings on strength to its monthly risky level at $60.80.
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Shares of Intel  (INTC) - Get Report opened higher on Tuesday after the semiconductor giant was upgraded to market perform from underperform by Raymond James. 

The stock opened Tuesday at $59.94 and traded as high as $60.56 in morning trading, staying shy of its monthly risky level at $60.80.

The upgrade was based on demand for notebooks and cloud computing as workers upgrade their at-home offices. Here’s the full story as described by TheStreet.com.

Intel closed Monday at $58.43, down 2.4% year to date and in correction territory 16% below its multiyear intraday high of $69.29, set on Jan. 24. 

The stock is also in bull-market territory 34% above its March 23 low of $43.63.

The stock is reasonably priced, with a p/e multiple of 11 and a dividend yield of 2.44%, according to Macrotrends.

Intel, a veteran tech stock, lags its tech-bubble peak of $75.81, set in August 2000.

The Santa Clara, Calif., company provides data centers with services for server, networking and storage applications. Intel also provides applications in cloud computing. It also makes computer chips for self-driving cars, artificial intelligence and for the internet of things.

The daily chart for Intel

Daily Chart For Intel

Daily Chart For Intel

Courtesy of Refinitiv XENITH

The daily chart shows that Intel has been above a golden cross since Oct. 25, when the 50-day simple moving average moved above the 200-day simple moving average. 

This is a buy signal as it indicates that higher prices will follow. This signal tracked the stock to its 52-week high of $69.29, set Jan. 24.

The stock gapped higher on Oct. 25 on a positive reaction to earnings. This happened again on Jan. 24, again as investors lauded the earnings. This time, strength proved an opportunity to book profits.

Note the island reversal. This occurs when you can draw a circle around a trading range without touching a price bar. This is the pattern between Jan. 24 and Feb. 21.

The stock has been below its 50-day simple moving average since Feb. 25.

The annual and semiannual pivots at $57.17 and $57.37 have been magnets since Feb. 27, despite the low of $43.63 set on March 16.

The second-quarter value level at $51.28 held on April 2 as a buying opportunity.

The stock is now between its annual and semiannual levels and its monthly risky level at $60.80.

The weekly chart for Intel

The Weekly Chart For Intel

The Weekly Chart For Intel

Courtesy of Refinitiv XENITH

The weekly chart for Intel is positive, with the stock above its five-week modified moving average of $56.23.

The stock is above its 200-week simple moving average, or reversion to the mean, at $45.50, which was tested during the week of March 20 as a buying opportunity.

The 12x3x3 weekly slow stochastic projected to rise to 36.12 this week from 31.43 on April 3.

As the year began, this level was above 90, putting the stock in an inflating parabolic bubble formation, and bubbles always pop. This was followed by a bear-market decline.

Trading Strategy: Buy weakness to the semiannual and annual pivots at $57.37 and $57.17 and reduce holdings on strength to the monthly risky level at $60.80.

How to use my value levels and risky levels:

The closes on Dec. 31, 2019 were inputs to my proprietary analytics. Semiannual and annual levels remain on the charts. Each uses the last nine closes in these time horizons.

Second quarter 2020 and monthly levels for April were established based upon the March 31 closes.

New weekly levels are calculated after the end of each week.

New quarterly levels occur at the end of each quarter. Semiannual levels are updated at mid-year. Annual levels are in play all year long.

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.

A reading above 90.00 is considered an “inflating parabolic bubble” formation that is typically followed by a decline of 10% to 20% over the next three to five months.

A reading below 10.00 is considered as being “too cheap to ignore” which typically is followed by gains of 10% to 20% over the next three to five months.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.