Trading Intel's Plunge After Disappointing Earnings

Intel is getting hammered after reporting earnings. Should it be up? That's not our call. Let's look at the charts instead.
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Shares of Intel  (INTC) - Get Report were under pressure Friday, falling more than 11% after a disappointing third-quarter earnings report.

Non-GAAP earnings were in-line with expectations, while revenue of $18.3 billion slightly edged out expectations of $18.2 billion.

For the quarter, gross margins came in at 54.8% vs. expectations of 56.8%. The 200-basis-point miss was disappointing and management said margin pressure was likely to continue in the fourth quarter as well.

However, management also gave a slight boost to its full-year earnings and revenue guidance, up from the prior outlook and slightly ahead of estimates. Ordinarily that’s enough to give the stock a boost. At the very least, it’s usually enough to keep it from cratering.

Maybe it’s because investors would rather go with Nvidia  (NVDA) - Get Report or Advanced Micro Devices  (AMD) - Get Report, both of which have growth and momentum while Intel does not.

Perhaps it’s because Intel’s last quarter was a mess and investors can’t handle another disappointment - that being the shortfall in datacenter revenue this quarter. Either way, it’s not a good look for Intel.

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Trading Intel

Daily chart of Intel stock.

Daily chart of Intel stock.

With Friday’s decline, Intel stock is seeing a clean rejection from the 50-week moving average and knifing right through the 10-week moving average.

The decline has shares dropping toward its prior post-earnings low from this summer, which is at $46.65. Things could be worse, though.

Last time Intel reported earnings, shares gapped down by 13.6%, lost 16.2% that day and ultimately fell more than 22% over the span of six days. Bulls are hoping the stock won’t have a repeat performance.

Should the stock crack below the prior post-earnings low, it will put the 200-week moving average in play. Should shares close below that mark, it could put the coronavirus low in play near $43.

That $42 to $43 area has been an area of strong demand for Intel stock over the past few years. Should it drop that far, I would again expect this level to act as support.

Should Intel find its footing at or above the 200-week moving average, let’s first look for a move back toward $50 and the 10-week moving average. Above could put $52.50 in play and perhaps higher depending on the strength of the bounce.

For now though, bulls do not have the advantage. Let’s see if support holds.