Intel, Inc. (INTC)
Wednesday, January 23, 2008
by David Yu
Numerous technical divergences indicate this New Year carnage might've been the persistent symptom of Market Bulimia. The purging is usually followed by episodes of binge eating. The Dow had a huge swing from the intraday low to the intraday high on Wednesday; it gobbled up more than 750 points in just 3 hours in the afternoon. This is the fierce counter-trend rally that I've been writing about since last week. This has presented trading opportunities in select sectors.
One sector that had been battered mercilessly was the tech sector. I'd grown a little tech-phobic lately due to their high flying price-to-earnings (P/E) ratios. However, recent selloff had drastically lowered their P/E ratios and made some of these tech shares look quite attractive.
The safe bet in this perfidious market is on the large caps. I went over top 10 holdings of the Nasdaq 100 (2 of the top 10 aren't tech stocks) and found just one, Intel, that met my criteria as a value play. This was the stock that I'd alerted you to keep an eye on last Thursday. When Intel's P/E dropped to single digit today, based on the intraday low and high-end estimate of next year's earnings, it became too good of a buying opportunity to pass up (see Chart 1 below).
Chart 1
Chart 2, the 5-minute intraday chart of INTC and the SPX (S&P 500), shows INTC surged above Tuesday's closing (red dotted line) within the first hour of trading while the SPX( lower pane) began to slide. And, as it started to pull away from the rest of the market (the SPX) at around 10:00 am, I found it to be a great entry point. This counter move also validated increasing demand for INTC shares.
Chart 2
I went ahead and picked up quite a few shares of INTC - see ledger below. With a tight stop in place, I'd set a target price at 22.45. I'm expecting either a quick 20% profit or a longer term holding, depending on wherever INTC wants to go. I'm just here for the ride.
I wish I'd have more time for further elaboration, but time's run out on me again. I hope this concise technical walk-through demonstrates one of the processes I use to select and trade stocks. If you had good thoughts or ideas, feel free to forward them to me. Since I haven't been able to write as much as I'd like to, I can perhaps post your comments here instead.
email: dyuguard-2@yahoo.com