Intel Stock Earnings Warning Tanks Stock And Brings Profit Opportunity

Intel Stock announced this morning that third quarter earnings would come in on the low side. Intel estimates next quarter earnings at probably 13.2 billion versus the 13.8 billion originally estimated. You can read the Intel Stock earnings projection release here. The concern among investors isn’t with Intel possibly earning 600 million less in the next quarter but the chance that the softness in their market could continue going into future quarters depressing Intel Stock. Yesterday I wrote an article looking at the value of keeping charts and in that article I included a number of charts including an Intel Stock chart which showed the quarterly earnings. I have included a copy of that Intel Stock chart below.

Intel Stock Quarterly Earnings Chart

You can see in the quarterly earnings chart for Intel Stock over the past decade that earnings has varied widely. Any slowdown in the economy has been matched by a slowdown in quarterly earnings. While the dividend payout has increased annually over the same period, the price of Intel Stock has tended to follow earnings. Lower earnings,  lower share value. It is that simple. Therefore while next quarter may be weaker than anticipated, the stock may drift lower back towards support around between the $22 to $23 level.

Intel Stock Earnings

Intel Stock Earnings Chart

Intel Stock – Volume And Support

I have mentioned many times about support and resistance on my website. It is not difficult to quickly look at a chart and spot support and resistance levels on most stocks, in particular big cap stocks like Intel Stock. Select this support and resistance link to review more articles that discuss support and resistance.

The chart below from April 2011 to Sept 2012 can quickly be reviewed to spot where stronger support is in a stock. In prior articles I have mentioned how the $24 to $25 level is well worth considering for Put Selling as there is a fair amount of support at that level. You can see in the chart below how often the stock traded within that range. The next level of support is the $22 to $23 range.

If I add the volume indicator to the chart, it becomes obvious that there was a lot more volume in that valuation. You can also see that there is less volume in the $24 to $25 level. Based on volume then there are fewer investors who own Intel Stock between $24 to $25 than between $22 to $23. Support then is less at $24 to $25 and much stronger at $22 to $23.

It makes sense based on volume because with less support at $24 to $25, should the stock fall below $24 many investors who did not sell, will then sell and quickly push the stock below $23. However at $22 there are more investors and they will be reluctant to sell their shares below $22, hence stronger support.

Support levels in Intel Stock

This Intel Stock Chart shows where support lies based on volume.

Intel Stock Dividend Support

The present Intel Stock dividend is .90 cents. At $22 that .90 cent dividend provides 4.09% yield. Something dramatic will have to happen to Intel Stock to push it much below $22. A stronger slow down and even worse earnings could do that.

Using Intel Stock Support For Profits

Now that I know where support is, I can use that for profit-making opportunities. Yesterday the market had the best day all year following the ECB announcement of buying short-term bonds from those Euro member nations facing liquidity issues.

Intel Stock rose yesterday to above $25 which placed it at the high-end of the support zone discussed above. The announcement this morning pushed the stock right to the bottom of support at $24.

I knew immediately that this was an opportunity to buy shares for a bounce. When a stock falls that quickly right at the open but the overall stock market trend is still intact, then it is a matter of waiting to see if worried investors will push the stock to support extremes. Sure enough this morning they pushed it to $24.02. I bought 1000 shares at $24.05.

There is however no point in holding my shares longer than one day. The damage done by both the announcement by Intel and the drop of the stock by investors normally will not allow a stock to bounce more than half of the decline. The decline was over 4% and I want around 2% for a bounce. That would place the sell of my shares at about a .48 cent profit.

Intel Stock and The Ultimate Oscillator

To assist me I add the Ultimate Oscillator. Just as per my SPY PUT trades, I use the oversold and overbought readings to assist my buying at the oversold level and selling at the overbought level. Many day traders will use the Ultimate Oscillator to assist them in day trading a variety of stocks. I almost always use it on my favorite stocks only on big drops when investors push one of my stocks into the low ends of support, such as happened this morning with Intel Stock.

The Intel Stock chart below shows the close yesterday and then the plunge at the open today. As Intel Stock plummeted towards $24, more and more investors sold and the Ultimate Oscillator flashed an oversold reading right near the open. I was pretty pleased to pick up stock right at the bottom of support, paying $24.05 for 1000 shares.

I immediately put in my sell for .48 cents high at $24.53. As Intel Stock rose and pushed towards being overbought my shares were sold.

Many day traders will put in their sale price but then watch the stock and consider adjusting that price based on the movement of the stock and the Ultimate Oscillator overbought readings. I tend not to do this.

Intel Stock Ultimate Oscillator

The Ultimate Oscillator can be used on Intel Stock for day trading

Intel Stock Day Trade Summation

This trade in Intel Stock was simple to execute because:

1. I have already plotted out the support levels in Intel Stock.

2. When the stock opened down I immediately put in an offer to buy at $24.00. Once I saw the oversold reading from the Ultimate Oscillator I moved my buy price .05 cents. It was filled within seconds.

3. I calculated from yesterday’s close that a drop to $24 would be a loss of 4.2% in valuation.

4. I calculated that a bounce from support normally retraces 50% or 2.2%. This translated into a movement of .53 cents from $24.02, the low at the morning sell off. This should regain from $24.02 + .53 = $24.55.

5. I put in my offer at .48 cents higher or 2% from my purchase at $24.05 which means selling at $24.53.

Investing in stocks need not be complicated and often the simpler strategies provide the easiest to earn returns, but it is important for investors, especially the small investor to realize that manipulation of stocks is most likely a daily occurrence. Intel Stock has been weak for a number of trading sessions. The news that Warren Buffett moved out of Intel Stock depressed the stock and made a lot of investors wary. It is interesting that Intel would pick the day after a big gain in their stock to make their announcement of reduced earnings outlook. It is also interesting that the announcement pushed the stock to the very bottom of the first level of support in Intel Stock, where a lot of traders are sitting and most certainly would be jumping in to trade the stock.

While all of this is conjecture on my part it really does not matter. My own views on market manipulation can be read in “Market Manipulation – You Bet“. By understanding that stocks can be manipulated and being prepared for opportunities when they happen, an investor can profit by basically keeping their eyes open and having done their homework in advance. Since I was prepared by knowing where support most likely lies, I could take advantage of this morning’s sell off. But I also know that the support at $24 is weak when compared to $22.00 to $23.00 and therefore buying shares of Intel Stock in this morning’s sell off and not trading them for a quick profit would probably have been a mistake as there is a good chance that Intel Stock will move lower in upcoming weeks.

Internal Intel Stock Links

Review Intel Stock Trades For 2012

Review Intel Stock Trades For 2011

Review Intel Stock Trades For 2010

Intel Stock Trade ArticlEs Index

External Intel Stock Links

Intel Stock Latest Investor News

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  • tanyon

    thanks to you have used ultimate oscillator 5,10,15 very renently with nue nucor steel…….worked like a charm u da man tanyon