Intel Corp. (INTC) beat the Street's estimates when it announced its third-quarter results last week. The company reported earnings per share (EPS) of $0.58, beating the consensus estimate of $0.53. Revenue for the quarter was $13.5 billion, which was in line with analysts' expectations.
In terms of its outlook for the fourth quarter, INTC announced that it expects revenue to come in somewhere around the $13.7 billion mark, while the Street expects fourth-quarter revenue of $14 billion.
CEO Brian Krzanich was upbeat about the company's third-quarter performance and strategy execution: "We're executing on our strategy to offer an increasingly broad and diverse product portfolio that spans key growth segments, operating systems and form factors. Since August we have introduced more than 40 new products for market segments from the Internet-of-Things to datacenters, with an increasing focus on ultra-mobile devices and 2 in 1 systems."
Whether all of this will play out as planned remains to be seen, but from a technical perspective, the stock's chart looks enticing. The day after the company reported its earnings results, the stock rallied 1.3% as investors and traders alike seemed to take the news well.
While INTC no longer has the level of influence or status it once enjoyed in the late 1990s and early 2000s, it still is an important company that is worth watching.
On the weekly chart looking back to mid-2004, we see a stock that has shown remarkable technical improvements since its 2009 lows and that reacts well to technical analysis.
INTC rallied strongly off its 2009 lows into an early 2010 intermediate-term high, where it began an important consolidation phase that ultimately led to a fresh multi-year high in May 2012 near $29. The $29 area coincided with a resistance line that the stock had been trying to overcome since 2004.
Resistance once again proved to be too great, and a sharp sell-off followed in the second half of 2012, which however, still took place within the confines of its multi-year consolidation phase.
Long-term investors may have been able to stay the course, but anyone with an investment time horizon of less than two years likely got shaken out of their long positions, and if they didn't, it would point to an exceedingly poor risk management style.
INTC found good lateral support again in late 2012, which coincided with an uptrend line dating back to 2009. Through this lens, the stock continues to act in a constructive manner.
On the daily chart above, we see INTC traded in a choppier manner this year, but is still up about 20% year to date, as it held important support lines in this medium-term time frame as well.
With its higher lows in August and again in early October, INTC slightly undercut its 200-day simple moving average both times, but all the while, held its November 2012 uptrend line. This shows the importance of using multiple technical indicators and looking for confluence areas rather than to-the-penny absolute levels.
From here, INTC looks poised to break past its multi-month resistance line and move back toward its 52-week high from June and beyond.
Recommended Trade Setup:
-- Buy INTC at the market price
-- Set stop-loss at $23
-- Set initial price target at $28 for a potential 16% gain in 8-12 weeks
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