Intel shares just showed downside confirmation after breaking below the neckline of the head and shoulders pattern on its weekly time frame. Price is also moving below the 100 SMA, which is still above the longer-term 200 SMA at the moment and suggesting a potential bounce.
The next support area is located at the $25/share level, at which profit-taking could take place. Stochastic already indicating oversold conditions but hasn’t crossed higher yet, indicating that there’s selling pressure left. Similarly, RSI is on the move down and is in the oversold region but still reflects that sellers are in control.
A continued downtrend could take Intel shares below $20/share eventually. The head to the neckline spans from $37.50 to $30/share so around $7.50/share in losses might be seen after this breakdown. Risk appetite has been weaker in the US equity market, as commodity prices have been tumbling and traders have been moving their funds to safe-haven assets.
Intel Shares Outlook
Intel shares have been trading lower since the start of the month, after the company announced major changes to its management team. Intel announced that President Renee James, who has spent 25 years with the company, will be stepping down from her role in January 2016 to pursue a CEO role at another unnamed company.
In line with this, the company announced that Arvind Sodhani, president of the company’s mergers and acquisition arm Intel Capital, will be retiring in January, ending a 35-year career. According to CEO Brian Krzanich, this shift will allow the company to “become more efficient in order to deliver the benefits of our strategy even faster than before.”
In terms of earnings, the company actually exceeded analysts’ expectations. Intel printed earnings of $0.55 per share, $0.05 better than the Capital IQ Consensus of $0.50 while revenues fell 4.6% year/year to $13.2 billion. Reports have shown that insider selling may be weighing on Intel shares for the time being.
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