- Chart pattern shows that Intel stock is a potential buy.
- Wait until after the election to buy.
- Don't try to anticipate who will win; there is a lot of noise in the data.
Chart patterns are a wonderful visual provided you keep everything in context and don't go crazy trying to catch the next big move that everyone is after. Interestingly, everyone misses it. For a long term pattern, this chart of Intel (NSDQ:INTC) caught my eye. It is the famous W formation also known as a double bottom. Actually, it is a continuation double bottom because the prior trend was up. I have highlighted it below.
(Source: Yahoo Finance)
Most of you may be thinking you have missed the entire move. Don't let your emotions get in the way because while the pattern was developing there was no way of knowing that it would complete. Now that the price is near the beginning of the pattern at around 38 bucks, you need to monitor the stock closely and see if it holds that level. If it does, then the typical target is measuring the range from the bottom of the pattern to the top of the pattern and projecting it. To be conservative, I would measure from the 28 leg to 38. So the maximum target, you would be looking at is 48. However, I don't think it is smart to just rely on this type of analysis alone.
I am a firm believer in taking profits when the market goes in your favor. It is only after the fact analysis that you could have made a killing. The projection is something to keep in the back of your mind, the stock does not have to go there.
Keep An Eye On The Overall Market
Also, watching what the overall market does is key when picking individual stocks such as Intel. If the overall market falls, Intel is not special. It will fall as well which brings me to my next point. I think it is wise to just observe the market and wait to make a move until after the election. If you notice the major market indices, they are stuck in a tight range. According to this analysis by John Carter*, it seems like the market is pent up with energy due to this election being very uncertain and highly unpredictable. He shows historically that there was a time in history that was more uncertain. 1948 to be exact. (The video range worth watching is between 11-13 min range) After that historical election, the market exploded upwards. However, it is not the direction you should be concerned about. It is the possibility that the market may perhaps move violently in one direction.
Wait Until Elections
Thus, you do not want to get caught in an unfavorable position trying to time the market based on who might win the election. Besides the polls are subject to huge errors. Though RealClearpolitics.com shows Clinton leading Trump by around 7 points, the problem is you just cannot tell who will win when the margin of errors overlap. This has to do with sample selection and the confidence intervals of what should be two distinct sample distributions overlapping. Thus, the election is a toss-up or the data is flawed. This is just like Brexit all-over again data-wise. So be cautious and patient before buying Intel stock.
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*I am not endorsing John Carter or promoting any of his services. I just thought his analysis was interesting.