Wednesday, 10 October 2012

Quick Technical Chart Summary - Intel - INTC

Today's quick look is Intel Corp. (INTC).  For the last week, tech has been hit pretty hard but Intel has been dropping every since mid August when it kept lower highs and lower lows.

You can see from the daily price chart below, Intel broke under its trading channel back at the beginning of September and has subsequently continued its downward trend.  While some of its technical indicators show a potential bottom last week, that did not stop the price from dropping continuously with a precipitous drop on Tuesday.

However, with a 25% drop since May, one has to wonder if Intel has been oversold as its now very positive from a valuation perspective.  Its sporting an extremely low PE ratio (ttm) at 9.3 which compares favorably with IBM at 15.11, CSCO at 12.6, MSFT at 14.6, etc.  Its also yielding a tremendous 4.0% dividend.  Again, this compares vs IBM at 1.6% yield, and MSFT at 3.1%.  At this price point, even a flat performance will yield a good return via dividends alone.

So the question now becomes, whats the downside?  Obviously further drops is possible but whats the downside potential?  Based on the last 6 months, its broke through all its support, particularly the last one at $23.5.

Looking further at the multi-year chart:

Its currently at a multi-year second price support of ~$22 so there's a good chance it could bounce around the current price.  There's another price support around $21 and a very low one at $18.5.  At that point, INTC would be hurting quite a bit.  However, as a longer term play, INTC still has significant potential and a small cost averaging opportunity as it drops or bottom would not make for a bad play.

Disclosure: Initiated a small long stock position in INTC over the last several days.

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