Today’s whoopsie doo on INTC

Intel (INTC) has been on everyone’s radar for a while. It’s worth about ⅓ what it was a few years ago, and the name Intel is one everyone knows (as opposed to say, Palantir–I asked my mom what Palantir was and she told me it was the company that sold those bikes). It’s been rightfully sold off; its fundamentals stink. The dividend isn’t sustainable, free cash flow has been shrinking and is now negative, debt is piling up amidst other issues.

Despite its awful technicals, people are still buying it. To be clear, they are buying the growth, revenue and earnings story, and then buying the stock as a result. Looking at a weekly chart, INTC has done two very notable things:

1. It has made a very, very reliable double bottom chart pattern. This indicates that the stock has found a firm and reliable set of buyers at the $19 price point. This provides a floor of sorts. If there were buyers at $19 before, and there are still buyers at $19 now, then surely there will be buyers at $19 later.
2. It has broken the pivot high and closed into the gap. (The gap is empty space on the chart where price has not traded. The price “gapped” from one price to another without trading there in between.) The odds on price “filling” the gap (trading through the rest of the gap to fill in the missing trading zone) are high.

Both of those things are SOLID bullish signs. But…

It entered the gap and then was rejected. That’s not a good sign at all. That’s a very bad sign, as a matter of fact…

They are currently missing a CEO, they have uncertain acquisition stuff going on (there were whisperings of Taiwan Semi and/or Broadcom acquiring some of Intel’s assets, but that seems to be about as likely as my daughter putting her shoes away, ever.) and a fair amount of bearish option sentiment at the moment. All signs point to NO.

Call me crazy, but I’d be short INTC in a heartbeat. Disclosure, I’m NOT short yet, but I might get there soon. I’m looking at potential bearish options positions with an entry target of INTC @ $26.25. I would flip long at $19. A close above $27.50 would take me out, and a close below $18.00 would take me out of the long.

Those are good risk/reward numbers and a nice position to carry against your portfolio if you are mostly long. Always nice to have a hedge on just in case we wake up and residual poo is on the fan.