Will Intel's Rally Close the Gap?

Intel Corporation (INTC) shares continued their recovery on Wednesday following a steep drop in late July. During its second quarter conference call, the company announced that its 10-nanometer (10nm) chips for data centers would be delayed until 2020. That could open the door for Advanced Micro Devices, Inc. (AMD) to steal some of Intel's 97% server market share with its upcoming 7nm chip and its existing Epyc chip that is gaining traction.

According to Reuters, Intel plans to stitch together its CPUs and tweak them to be more competitive against Nvidia Corporation (NVDA) in the artificial intelligence market, where it has already sold $1 billion in Xeon AI chips last year. The company also plans to combine Optane chip technology with its processors next year in a move that could further bolster its offerings. (See also: Intel Needs to Prove It Can Beat AMD: Barclays.)

Technical chart showing the performance of Intel Corporation (INTC) stock

From a technical standpoint, Intel stock has recovered from a low of around $46.00 toward its current levels around $50.00. The relative strength index (RSI) moved to neutral levels of 47.07, but the moving average convergence divergence (MACD) appears on the verge of a bullish crossover. These indicators suggest that the stock could have more room to move higher over the coming weeks following the sell-off in late July.

Traders should watch for the stock to close the gap created on July 27, which would involve a move to the 50-day moving average and R1 resistance at around $51.84, before experiencing some resistance. If the stock breaks down from these levels, traders should watch for a move to retest lower trendline and 200-day moving average levels at around $48.52. (For more, see: Intel's 'Biggest Risk' Remains Unresolved.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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