Intel Corporation (INTC) shares fell more than 1% in early trading on Monday after breaking out from trendline resistance on Friday. Barclays downgraded the stock from Equal Weight to Underweight and lowered its price target to $38.00, citing market share losses and price cuts as Intel struggles to compete. Baird analysts also downgraded Advanced Micro Devices, Inc. (AMD), Intel's primary competitor, from Outperform to Neutral.
Intel shares rallied on Friday after the company issued an update on its 10-nanometer (10nm) development. Management noted that the company continues to advance its 10nm yields, and volume production is still expected next year. The delays for Intel had been a tailwind for AMD's stock, which moved lower on the news. (See also: Intel Hit With Another Downgrade on Production Issues.)
From a technical standpoint, Intel stock broke out from trendline and pivot point resistance levels at $46.59 to the 50-day moving average at $47.77 on Friday. The stock gave up ground on Monday morning amid the analyst downgrade, and the breakout is at risk. The relative strength index (RSI) appears neutral at 48.51, but the moving average convergence divergence (MACD) remains strong.
Traders should watch for a rebound from trendline and pivot point support levels to retest the 50-day moving average this week. The next two resistance levels to watch would be reaction highs and R1 and R2 resistance at $49.15 and $50.96, respectively. If the stock breaks down from this support, it could move back into its price channel to S1 support at $44.76. (For more, see: Why Intel's Stock May See a Massive Rebound.)
Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.