News Creates Tradable Patterns — An Example From Intel
Everyone was talking
about Intel (INTC)
this morning. Yesterday after the close, Intel reported its second-quarter
earnings. The first news said that Intel made $0.12 a share, $0.02 better than
the First Call consensus of $0.10. Shortly after this news, somewhat negative
news followed: “Intel states that its second-quarter earnings were boosted
by a penny due to a downward revision of its 2001 tax rate to 25.7% from 29.8%.
Without the benefit of the lower tax rate, Intel’s earnings would have been in
line with the consensus.” I like it. The news like this will create
volatility for daytraders.
As expected, Intel opened lower as you can see on its five-minute chart below.
(The red line indicates the level of yesterday’s high.) Instead of going down
further, the stock immediately reversed and began to rally. My first buy entry
point came when Intel successfully penetrated into above the lower Bollinger
Bands.
The second opportunity presented
itself at 10:00 a.m. Intel failed to take out yesterday’s high and moved back
down to the lower band. I’m not specialized in news trading, but I will tell you
this, “news moves stocks quickly.”