Trading Intel's Earnings Surge to New Highs

Intel is surging to new all-time highs after better-than-expected earnings. Here's how to trade the stock now.
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Intel (INTC) - Get Report shares were surging higher on Friday, climbing 8% and hitting new highs during the session.

The move came after better-than-expected fourth-quarter results from the chipmaker. Earnings of $1.58 a share were well ahead of estimates, beating expectations by 35 cents a share. Revenue of $20.21 billion grew 8.3% year over year and breezed past expectations by nearly $1 billion.

Intel shares had been on fire coming into the report, becoming technically overbought and hitting new all-time highs. In other words, it would take a special quarter to send shares higher.

But that’s exactly what Intel gave investors. Not only did it blow away top- and bottom-line estimates, but management’s first-quarter outlook for profit and sales came in well ahead of expectations. The company's full-year outlook was above consensus estimates too.

It makes Intel a perfect candidate for Real Money’s Stock of the Day. Let's look at the charts. 

Trading Intel Stock

Daily chart of Intel.

Daily chart of Intel.

This was a great quarter, but Intel is putting investors in a tough spot. It reported a blowout fourth quarter, posted robust guidance for the upcoming quarter and gave solid guidance for the year. But the stock was already up to all-time highs and is now surging another 8%.

It’s easy to be bullish on Intel, particularly after this quarter, but it’s hard to be a buyer right now.

Intel had a morning high of $68.75 on Friday. That’s also where the 1.236% extension comes into play, to the penny. Should Intel close above this mark, look to see if it can push through $70 and get to the 1.386% retracement at $71.95.

On the downside, let’s see how investors absorb the stock on any sort of pullback. Do we get consolidation within the post-earnings range, currently between $66.46 and $68.75? Above the high improves the likelihood of the first scenario playing out (an extension up to $70-plus). Taking out the bottom of that range puts a pre-earnings gap fill down toward $64 on the table.

So what’s the bottom line on Intel stock? With tech stocks doing well and chip stocks doing great, Intel had our interest. That interest climbed even more once the company reported such strong results.

While there may be a bit more upside, this name needs some sort of consolidation. Whether that’s through time or through price is not yet clear, but Intel will be a buy-the-dip candidate once it settles down a bit.