Intel has had strong gains this week, but here's what the charts are saying about the stock's outlook.
As Intel begins to test the February high, shares are up just over 5% from Tuesday's bottom. On Wednesday the stock moved to new May highs as upside trade, while still below average, printed its highest mark in over five weeks. Thursday, Intel extended the breakout but stalled at mid day near its flat-lining 200 day moving average.
With Friday's gain, Intel begins to enter a heavy resistance zone. The February high marks the lower band of this important area. After the damaging collapse in late January, sparked by Microsoft's (MSFT) - Get Report disappointing outlook, Intel was able to hold support near its upward-sloping 200-day moving average.
Shares consolidated in a tight range between the high of the Jan. 27 downside gap and the 200-day. The February high was capped right at the $34.75 level as well. Three weeks later INTC began the second stage of the post-Jan. 27 breakdown, confirming the February peak as a solid resistance level in the process.
Intel's second leg lower found major support at the Oct. 15 spike low. The stock has been steadily recovering since then. At this morning's early high, the stock was up over 17% from the March low. This rebound has recovered nearly all of the late January selloff.
An impressive move to say the least, but further upside may prove to be a struggle in the near term.
Here's what The Street's Jim Cramer had to say about Intel:
"When I pulled up with Intel recently, I was struck by how it wants to be so much more than a personal-computer-related company. Buying Altera could make that happen with gusto. Given how well Avago's (AVGO) - Get Report stock has acted since its announced bid for Broadcom (BRCM) you could logically conclude that Intel could rally sharply, too."
Intel will enter an extremely heavy resistance zone as it retests the February high of $34.75. The upper band of this zone includes the huge gap left behind back on Jan. 27 at $35.55. This level also marks the 2014 peak.
Intel will need a big accumulation wave to power through this area. It's likely the stock will need to consolidate before convincingly moving past the $36 area.
In the near term, Intel has solid support in place near the $33.50 area. Similar to the action in February, the stock may spend some time straddling its 200-day moving average before making a move. This time, though, the trend is to the upside and will remain so unless Intel falls below the May low of $31.95.
At the time of publication, Morrow was long INTC.