Intel Corp. (INTC) shares struggled to continue its bullish move higher following its second quarter results that highlighted weaker growth from its data center business. The largest chipmaker reported restructuring effort update, better than expected profit and in line revenue. Today’s 3.25% stock price decline to $34.53 occurred after the company reported earnings of $0.59 a share, a beat from the analysts’ consensus of $0.53. Revenue dropped ~2% to $13.53 billion, but barely missed expectations of a $13.54 billion print. Data Center Group revenue of $4.0 billion was up 1% sequentially and up 5% year-over-year. The company also guided Q3 revenue at $14.9 billion, +/- $500M.
Price action on the INTC daily chart shows that the recent bullish move formed a bearish ABCD just before today’s earnings release. Point D was targeted with the 200.0% Fibonacci expansion level of the B to C leg. If the current reversal accelerates, price may not find support until the $33 region. Critical support will come from the $29.50 to $30.50 zone.
If we see the selloff end, further upside may target the $38.50 level.
The Trade: Buy INTC at $33.50, with a stop loss at $36.50 and a take profit at $32.50. The Risk/Reward Ratio is 1:3