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Apr 3, 2018

Investopedia | Intel Stock Moves Lower After Apple Drops Contract on April 3, 2018

investopedia.com

Intel Stock Moves Lower After Apple Drops Contract

Justin Kuepper

Intel Corporation (INTC) shares fell more than 8% on Monday amid reports that Apple Inc. (AAPL) plans to use its own chips in Macs beginning as early as 2020. While the initiative remains in the early stages, Apple has long planned to streamline the development of its components to prevent supply chain issues and optimize performance. Apple shares also moved marginally lower following the reports.
Despite the seemingly bearish news, Stifel analysts reminded investors that Apple represents only 4% of Intel's revenue and less than 1% of its profits. The research firm maintained its Buy rating on Intel stock and reaffirmed its $53.00 price target, which represents a 7.5% premium to the current market price. In addition, the analyst noted that Apple held just 7.3% of the traditional PC market during the fourth quarter. (See also: Analysts Say Reaction to Apple Ditching Intel Is Overblown.)
Technical chart showing the performance of Intel Corporation (INTC) stock
From a technical standpoint, Intel stock broke down from a rising wedge pattern in mid-March before falling below the pivot point on Monday. The relative strength index (RSI) appears neutral at 47.88, but the moving average convergence divergence (MACD) remains in a bearish downtrend after crossing over in mid-March. These indicators suggest that the stock could see more downside before resuming its uptrend.
[Brush up on supplemental technical indicators including the RSI and the MACD in Chapter 4 of the Technical Analysis course on the Investopedia Academy]
Traders should watch for a breakdown from the 50-day moving average and S1 support levels at around $48.10, which could lead to a move down to S2 support at around $44.12. If the stock rebounds, traders should watch for a retest of the pivot point at $50.94 or upper trendline resistance near R1 resistance at $54.92. However, the stock will likely continue to see bearish pressure for the time being given the Apple news. (For more, see: 3 Stocks That Will Win the High-Speed Data Wars.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.