Intel is not keeping pace with the broader market and chartists should watch the bearish wedge for signs of further weakness. There are two patterns at work on the price chart. First, INTC formed a rising wedge after a sharp decline and this looks like a short-term bearish continuation pattern. A break below last week's low would signal a continuation lower and target a move to support in the 33 area. Should this occur, chartists can then consider the possibility of a double top over the last eight months. A break below the October-November lows would confirm the double top and fully reverse the long-term uptrend.
Now let's look at relative "chart" weakness. Relative chart weakness occurs when the benchmark moves above a prior high (higher high) and the stock does not exceed this corresponding high. INTC hit a new high with a move above 38 in late January and fell well short of this high with the February bounce (red line). SPY, on the other hand, moved to new highs in February and early March (green line). Intel is clearly not keeping pace with SPY and lagging on the price chart. Should SPY move lower and start to correct, Intel would likely lead lower and break wedge support.
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--Arthur Hill CMT
Plan your Trade and Trade your Plan
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