Intel Corporation (INTC) broke out from an ascending triangle pattern on April 24, but the breakout failed when poor first quarter financial results sent the stock lower on April 27.
The company reported first quarter revenue that grew 8% to $14.8 billion – narrowly missing estimates – and earnings that rose 45% to 61 cents per share – barely beating estimates. For the full year, the company increased its guidance to $60 billion in revenue and $2.71-2.99 in earnings per share. The company also approved a $10 billion increase to its share buyback program that brings the total to about $15 billion.
On a technical level, the stock rebounded from its 50-day moving average at around $35.65 and broke out from its trend line resistance at $36.50 in the aftermath of the earnings results. The stock trades just below R1 resistance at $37.09 and its prior reaction highs just above those levels. Traders should watch for a sustained breakout from these trend lines toward prior highs at around $38.00 or R2 resistance at $38.29.
Technical indicators have been predominantly bullish over the past month. The RSI has increased to around 62.88, although those levels are nearing overbought territory. Meanwhile, the MACD has been on a bullish uptrend since mid-March, recently crossed above the zero line, and continues to trend higher. These indicators support a potential breakout from key resistance levels toward R2 resistance and prior highs.
Long-term investors remain somewhat divided on where Intel is headed over the coming quarters. Declining revenue growth could become a concern if it persists, while the company’s guidance may be overly ambitious. On the other hand, the company’s strong profit growth and new share buyback program could go a long way in reassuring the market. Traders will continue to keep an eye on the stock as it approaches its all-time highs.
Charts courtesy of StockCharts.com. Author holds no position in the stock(s) mentioned except through passively-managed index funds.