Intel Not Driving Sector Action

NEW YORK( TheStreet) -- Intel ( INTC) has been showing signs of life again and it's not clear whether Intel is the driver or if the sector itself is what has things moving topside. How you answer that question should affect your decision on what to buy.

On the daily chart, Intel is right at resistance. That resistance runs deep from the current price area all the way back up to $21.20 as seen in the daily chart below.

On the weekly chart, it is just as visible. What you can see on the weekly chart though, is where Intel might trade to next if it is able to break higher.

But Intel really isn't the driver. The chip stocks in general are driving the action. Here is a daily chart of six months of bars and what you can see is that the semiconductor sector has already broken over its swing point.

If I had to choose between buying Intel and buying semiconductor group, I would probably choose the group. Given the divergence shown here, the group will likely outperform the individual stock this time around. If the semiconductor group holds this breakout area for a bar or two, then the eventual target is back to the area from where it broke down in early August. That price area is around $32.

Until next time, just keep trading the charts.

L.A. Little, author, professional trader and money manager, writes daily on his own educational Web site for traders and investors. He has been featured in numerous publications and is the author of Trade Like the Little Guy. His new book, Trend Qualification and Trading, details the principles and techniques he writes about on TheStreet. Little�s background includes degrees in philosophy, computer science, computer information systems and telecommunications. With a trading philosophy centered on capital protection first and the accumulation of consistent gains over time, Little espouses a simple technical approach to trading the markets that is a throwback to the days of past. With a focus on swing points and trend qualification, he provides a breath of fresh air to an otherwise crowded room of derivative indicators with an emphasis on technical minutiae.