Technical Analysis on Intel Corp (INTC) Weekly Chart

In the last couple of days intel (INTC) crashed around 16% of its value, and its currently trading at 22.67$.
usually when seeing such a crash, an investor would start to smell the upward fix,
as its obvious that nothing with the earnings nor the sellings changed in these 3 days for such a large company trading in normal multipliers for the sector.

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i would usually analyse the daily behaviour of a stock, however, to reduce the amount of noise caused by the recent crash, i moved to a weekly chart, trying to get a clue on the direction of this stock.

i will start my analysis by an observation, checking the weekly bars from 1994-2007 we see a clear traingle (red) formed in Dec 95 and May 2000, broken at Apr 2007 in the price of 20.2 - 20.3$, forming a strong bullish sign with a target of 30$ rise, this took the stock up to recent value of 27.73$. a failure to break this resistance level with a lousy new year beginning shaded the bullish trend on the stock.



Examining the last couple of months Jul-Dec 2007

shows that Intel was trading in an envelope (Pink) all this period, and that the last crash (16%) took it to the edge of the envelope.
Assuming the envelope will support we will see a fix toward the middle of the envelope (26$), otherwise a major trend flip will happen. the stock value is at a critical point.

Another important technical indicator that should be considered is the fibonacci retracement of the last bullish trend since july, its surprising that the 50% fibonacci retracement level is at 22.16, which is very close to the envelope edge, breaking this level would take us to the 61.8% fibonacci support level on 20.86 . and again we have the stock value at an important point.

combining these two strong technical indicators together, on the weekly charts, leads us to the conclusion that its gonna be a volatile year for intel, down target of 20.8$ and up target of 26$ according to the breakout scenarios meantioned above.

looking furthermore for more information from technical indicators
RSI - neutral, getting close to buy area
OBV - shows that still not a lot of money is flowing out of the stock.
ADX - Shows weakining trend
MACD - SHowing bearish divergence
CCI - shows deeply oversold signal
Stochastics - weak Sell signal

I recommend, buying symmetrical options startegies (straddles, strangles) on the stock, to benefit both direction, or wait to confirmation of one direction to enter bullish/bearish on the stock.

for a bullish low risk strategy suggestion please click here .