As a semiconductor bellwether and market behemoth, INTC price changes are representative of the sector in general, but exhibit more inertia than those of small and mid cap semiconductor companies. This tends to make price movement less erratic and more predictable, which can make a trader’s job considerably easier.
Below is a short term trading plan update to a previous post from 9/5/09:
Look at the following 50 day chart and note the points below
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| From INTC long term view / short term trading plan |
Major points:
• Long term resistance points at $17 and $20.
- See previous post for background.
• $17 resistance broken definitively on 7/15
- Massive volume
- Gapped up >$1 to ~$18
• Next ~5 weeks spent in range bound trading.
- Lower bound = ~$18 (breakout)
- Upper bound = $19.5 defined by 7/23 close at $19.48 on high volume
- Center of gravity in this range ≈ $19
• Long term resistance at $20 breached, but only on moderate volume.
• Subsequent failure to stay >$20 was not definitive, as prices fell back on low volume.
• After falling below $20, prices hovered around the upper bound of previous trading range ($19.5)
• 9/11 close at $19.51 is of great technical significance in the short term.
• Consider the following 2 scenarios:
1. A voluminous move up from here would set $19.5 as the lower bound of a new trading range and form a solid base setting the stage for a definitive breakthrough to >$20 price levels.
2. A voluminous move down would put the $18-19.5 trading range back in play, validating the previous trading plan
Trading plan for scenario 1:
• Aggressively accumulate shares between $19.5 and $20
• Move stop up to ~19
• In the event of a price breakout >$20, target will depend on momentum, but it should be relatively smooth sailing up to at least $20.60.
Trading plan for scenario 2:
• Accumulate shares at or around $19
• Sell half between $19.5 and $20
• Repeat above 2 steps as many times as possible
• Place stop just below 18 (don’t get caught falling back through the gap)
