T = Technicals on the Stock Chart are Strong?
While Intel may be excited about its progress, Mr. Market has been disappointed with its lack of success in mobile devices, especially compared to the likes of ARM Holdings (NASDAQ:ARMH) or Qualcomm (NASDAQ:QCOM).
As the chart below shows, shares of Intel have been stuck in a downward spiral since peaking out at $29 in early May. On Monday, November 19th, Intel shares managed to close relatively flat, but the blue-chip was still one of the worst performers in the index. Furthermore, shares are well below their 50-day and 200-day moving averages, typically a bearish sign. In the past, shares have found support between $17 and $19, but even a retest of $17 represents 15 percent to the downside.
Although Intel has a dividend of 4.50 percent and a management shakeup that could be positive over the coming years, it is simply too early to jump on board. The company has failed to capitalize on the growing gadget market by companies such as Apple (NASDAQ:AAPL), Samsung, Amazon.com (NASDAQ:AMZN) and Google (NASDAQ:GOOG). Meanwhile, the PC-industry continues to show signs of weakness.
Gartner, a leading information technology research company, announced in October that worldwide PC shipments totaled 87.5 million units in the third quarter, representing an 8.3 percent decline from a year earlier. IDC, another research firm, also showed that shipments fell more than 8 percent in the most recent three month period. It is the largest drop for the industry since at least 2001.
Taking into account the components of our CHEAT SHEET investing framework, we find that Intel is a STAY AWAY until shares can stabilize and the company increases its exposure to non-PC products.
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