Let Intel Form Handle
The world’s biggest chipmaker gave the
Nasdaq a lift Monday as execs said they would reveal advances in the company’s
latest microprocessor for personal computers. Intel appears to be completing
a base, but let this stock settle down and give you a well-defined pivot
point before looking for an entry.
Intel
(
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PowerRating) will be
hosting its Developer Forum in San Jose, Calif., where it will unveil new chips
for cell phones, hand held computers and other devices as well as PCs. The
company said the Pentium 4 will be capable of speeds of 1.4 gigahertz, will ship in Q4.
Notice Intel closed up 1 1/2 to 72
1/16 on strong volume. But notice how the stock swung between a session extremes
of 74 1/6 and 70 9/16 to close in the middle of the range and below the open.
That’s evidence of a supply-demand fight. Odds are that the stock is under
accumulation, but the evidence isn’t as clear-cut as it might be.
I’d like to see this stock form a
handle with a price volatility contraction on low volume, a sign of investors
holding on at the current market price. Then you can look for an entry if the
stock breaks above the high of the handle on strong volume. For a detailed
treatment of handle formations, read Greg Kuhn’s lesson,
Handle On The Handle.
I’ll always let the market point my
way to the leaders, but I must admit that I’m a little concerned about Intel’s
fundamental growth going forward. Chips for PCs are this company’s bread and
butter, an area where growth may be moderating. I’m more intrigued by
semiconductor companies that specialize in wireless and high-bandwidth
communications.
As of Monday’s settlement on the Chicago Board of Trade, the September fed funds futures contract has priced in a 90% chance that the Federal Reserve will stand pat on interest rates. For more on how to forecast monetary policy, see
my lesson, Forecasting The Fed With Fed Funds Futures.