What Intel’s Technical Indicators Tell Us about the Stock
Intel’s stock price momentum
Intel’s (INTC) stock has been underperforming both the market and its peers. The stock has been almost flat for the past three years, but the acquisition of Mobileye and strong fiscal 2Q17 earnings have prompted some optimism among analysts.
As Intel enters a seasonally strong quarter, its earnings are likely to grow. However, competition from Advanced Micro Devices (AMD) and NVIDIA (NVDA) could slow down seasonal growth. It’s difficult to say which factors will influence Intel’s stock price the most, but technical indicators can help us understand in which direction a stock price can head in the short term.
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In technical analysis, short-term and long-term MAs (moving averages) play a key role. When the short-term MA is higher than the long-term MA, it indicates an upward trend and creates a buy signal. If a stock price is above the short-term MA, it indicates the stock is still in the uptrend and creates a buy signal. However, if the stock price dips below the long-term MA, it indicates a downward trend and creates a sell signal.
On August 23, 2017, Intel’s 50-day MA of $35 was lower than its 100-day MA of $36, and its current stock price of around $34.7 is lower than its short- and long-term MAs. Thus, all factors indicate that the stock is in a downtrend, which is a sell signal.
AMD’s 50-day and 100-day MAs stood at $13, indicating stability, but its current stock price of $12.5 is lower than its short- and long-term MAs, indicating a downtrend and signaling a sell. NVDA’s MAs show a strong uptrend as the stock makes new highs. Even at $166, the stock signals a buy.
RSI (relative strength index) is a technical indicator that measures the intensity of investor sentiment. RSI is measured on a scale of zero to 100, with less than 30 indicating that the stock is oversold, and greater than 70 indicating that the stock is overbought.
On August 23, 2017, Intel had an RSI of 22, indicating that the stock is oversold. Remember, when a stock is oversold, it’s near its bottom and has little room to fall further. At such times, the stock has a high probability of rising upward on any positive news that boosts investor confidence in future earnings.
By comparison, AMD and NVDA had RSIs of 35 and 48, respectively, indicating normal trading in these stocks.
Both these technical indicators show that Intel’s stock price is currently weak and is likely to remain weak for some time. However, the stock price has a probability to grow on any positive news.
In the next and final part, we’ll discuss whether Intel’s stock price justifies its fundamental valuation.