Buy the Dip in Intel as Shares Try to Ride AMD, Nvidia Momentum?

The semiconductor trade has been a hot one, but Intel  (INTC) – Get Free Report has lagged some of its key competitors.

Once the king of computer chips, Intel has taken a back seat to companies like Nvidia  (NVDA) – Get Free Report and Advanced Micro Devices  (AMD) – Get Free Report, both of which have soared on their artificial-intelligence aspirations.

Intel stock has seen a peak-to-trough decline of 64.5%.

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While the shares have rallied 32% off the lows, its $134 billion market cap lags that of both its key competitors, as well as that of other chip stocks like Texas Instruments  (TXN) – Get Free Report and Broadcom  (AVGO) – Get Free Report. We have taken note that Broadcom has traded well lately.

Intel stock had been enjoying a solid rally — 38% from its May 25 low to its June 20 high a few days ago — the shares have again unraveled.

The stock fell 11.5% from this week’s high to Wednesday’s low. At last check Intel was trading 1.6% lower.

Is it an opportunity for the bulls? Let’s look at the charts.

Buy the Dip on Intel Stock?

To be honest, the setup in AMD we outlined a few days ago looks a bit more attractive, given that AMD has shown more relative strength than Intel. That’s as Advanced Micro tests into the gap-fill area and the 10-week moving average.

For Intel, though, the setup isn’t all that bad.

Ideally, the stock would have held its pullback into the $33.50 to $34 area, where it found its rising 10-day moving average and the high from April.

But that area is not holding. Instead, Intel stock is trading down into the mid-$32 region.

There it finds the 21-day and 10-week moving averages, the 50% retracement and prior resistance. For longs, this is a better entry point: Sellers might well be exhausted and these measures are generally stronger than the ones outlined above.

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From here, a rebound back to the 10-day moving average and $34 area will give traders a sense of how strong the bounce is. If it reclaims these measures, $35-plus is in play.

On the downside, a continued breakdown could put the 50-day moving average and the 61.8% retracement in play near $31, but below that and things get pretty sloppy for the bulls.

The bottom line: Let’s see if the $32 area can hold as support. 

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