Trading Analysis for Intel Corporation (NASDAQ:INTC)

March 12, 2015, 12:12 pm ET, BY Thomas H. Kee Jr- Editor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

When stocks move aggressively trading opportunities exist and Intel Corporation (NASDAQ:INTC) may be a case in point.  It is important to recognize that Intel has broken longer term trading channels, but the observations made here are based on our midterm channels and therefore considered swing trading opportunities primarily.  The decline in Intel on Thursday has caused the stock to test its midterm support level.

Importantly, midterm support was lower than longer term support because Intel was weak going into today's decline.  On a longer term basis, Intel is considered neutral, but longer term support was $31.90 and that broke lower today, so in the days ahead we will expect a revision to our longer-term combined analysis for Intel specifically.

That does not change the midterm opportunity, however, because the midterm opportunity is based on midterm support.  Initially, as the stock opened on Thursday, Intel broke below midterm support, but immediately reversed higher again.  Midterm support exists at $30.86.  The immediate reversal back above $30.86 makes Intel look as if it is still holding midterm support, so midterm support still can be an actionable catalyst for trading purposes.

We expect this level to also adjust in the days ahead given the declines that happened on Thursday, so monitor it closely using our Real Time Trading Report for Intel, but for now the opportunity is clear.  If Intel holds $30.86 our combined analysis tells us to expect the stock to increase 5-10%.

On a fundamental basis, which is in addition to the trading observation above but will not influence the trading observation above, Intel trades with a peg ratio below 1, if analysts are right about their estimates for calendar 2015 the peg ratio will still be under 1 by the end of the year too, and even after growth rates decline from over 23% this year to just over 11% next year, if EPS growth declines as expected in calendar 2016, the peg ratio will still be at 1 at the end of 2016; our peg ratio evaluation suggests that fair value exists when peg ratios are between 0 and 1.5.  That means, on a fundamental basis using earnings growth as a catalyst to determine fair value, Intel looks fairly valued too.

Aggressive investors could trade Intel from midterm support but they must respect the changes to midterm support that might take place in the days ahead as the stock moves.

Support and Resistance Plot Chart for

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