Intel Stock Tumbles Into Support Zone – Can It Hold?

Intel Stock for most of the last two weeks kept retesting support at the $23 level. Intel stock symbol is INTC. If you recall from my various articles on Intel Stock, $23 is the top end of support and $22 is the bottom of that same support zone. The continually retesting of the $23 valuation was a serious issue for Intel Stock. I did not engage in more Put Selling last week except for Friday for options expiry as I wanted to keep my remaining Intel Stock capital free for day trading at this stage of the decline. You can read about Friday’s Intel Stock Options trades through this link. Instead I spent my extra capital that is slated for Intel Stock doing a few day trades as I tools advantage of the volatility of Intel Stock as it kept trying to contain the damage to the $23 valuation.

The problem though is that twice during the past two weeks Intel stock broke $23. It happened for only twice before today and for just short periods but the buyers would be taking notice. The normal course when that happens is to move back from the trade and wait to see if support can hold. Traders do not want to be the ones holding stock if it can be bought lower. Traders are always concerned about keeping their capital working and not taking losses. I feel the same way but I don’t mind if my capital is working while it is in the money such as most of my Intel Stock naked puts are at present. As long as my capital can still turn a profit, that is what is important to me.

Intel Stock Breaking Through $23

Let’s look at the Intel Stock chart for the last two weeks. You can see that the initial decline from $25 into the $23 level was quick since there was very little support between $25 and $23. The stock on September 11 held above the Lower Bollinger band and until today, Intel Stock drifted away from the lower Bollinger band. The problem though was the stock could not move higher. Basically no one has enough conviction that Intel Stock is worth over $23.00 at present, until they see where the economy is heading.

Once the next quarter earnings come in, investors will begin to focus on the new year. Meanwhile today the stock opened lower and collapsed quickly to $22.50 before buyers decided to step in and push the stock to close at $22.80. But it did close below $23.00 today and this will concern a lot of investors who bought at $23.00 over the last two weeks figuring that Intel Stock is under valued. They will be watching this week carefully. If Intel Stock falls quickly below $22 the selling will probably intensify. That’s what I am waiting for before selling more puts on Intel Stock.

Intel Stock Technical Analysis

So let’s have a look at the stock technical analysis to determine where Intel Stock may be headed and what opportunities may lie ahead. I have marked the key points over the last two weeks.

A. Momentum to the downside was worse on Thursday last week. Friday is showing momentum to the downside was beginning to fall off and today despite the stock falling below $23.00, momentum is continuing to rise. This could signal a short-term or possibly even a bottom in the recent selling. But despite the rise over the last two days, the stock has continued to be under pressure.

B. On the fast stochastic the extreme oversold condition was back from September 10 to 12.Unfortunately the fast stochastic continues to indicate that despite the stock drifting sideways, the extreme oversold condition is eroding which means the stock can fall further before it reaches another oversold condition.

C. Today’s reading continues to show more downside ahead in the stock despite what momentum is signaling.

D. The Ultimate Oscillator is confirming the fast stochastic. The most oversold condition was back September 10 to 12 and since then the oscillator is showing an increase all the way back up to 45.10 despite Intel Stock continuing to fall. This shows that there has been a lot of buying as the stock is being dumped by other investors.

E. Relative Strength Index (RSI) is below 30 which indicates pricing momentum is oversold and has been oversold for some time. Relative Strength Index (RSI) is a momentum predictor based on past prices. Normally I use Relative Strength Index (RSI) to judge when it is time to get back into a stock. In order for that to happen, RSI has to climb back above 30 and continue to climb. That is not happening to this point and today RSI has moved lower.

F. I point out the past heavier days of buying as many investors including institutional considered Intel Stock as too low and were in buying. But their buying did not push up the stock and you can see how the buying volume declined as Intel stock did not climb. This set the stock up for a further decline as support in the stock at $23 was not as strong as the original buyers thought. If Intel stock falls below $22, a lot of these investors will re-consider their positions.

G. Finally I end with today’s volume. Despite the drop in the stock to 22.50 volume was low. Indeed lower than even Friday. This can be considered two different ways. One way is that a lot of investors are now stepping back waiting to see how much lower the stock can fall. The other way is that based on momentum the selling is overdone. However normally is the selling is overdone buyers step  in.

Intel Stock Analysis Summary

After looking at the stock technical analysis my opinion is there is still room for the stock to fall. Volume needs to pick up on up days to convince more investors that Intel Stock is under valued. Meanwhile one of the strongest indicators that the worst, at least for the time being, is over could be today’s plunge to $22.50 and then push back up to $22.80 and closing there. Momentum certainly agrees with that outlook.

The next few days will be critical to Intel Stock. This is why I believe so strongly in Put Selling as a method of investing. It is always difficult to judge direction, yet when a stock as strong and with so much potential as Intel Stock falls, it brings up opportunities that are hard to resist. By setting aside specific capital for use in Intel Stock, I am able to earn very good put premiums, keep rolling those puts for more premiums, and continue Put Selling at lower strikes as the stock keeps falling. By staying ahead of assignment I can keep working lower into Intel Stock until eventually I can end up with a very good position in a great stock and ready for when the stock recovers. In 2010 to 2011 it was Microsoft Stock and this year it looks like it will be Intel Stock.