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Seasonal Improvement

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Intel (INTC) reiterated that they expect a seasonal improvement in demand for the second half of the year, but as Intel's general manager of the Architecture Group said, "Almost by definition, anything has to be better than the first half."

Intel Point and Figure Chart

Initially Intel got a pop on the news and traded as high as $29.66, but since then the stock has drifted lower. Intel needed to trade $30 to reverse back into a column of Xs, but now remains in a column of Os, one box away from giving a quintuple bottom sell signal. Support at $27 has been strong, but resistance at $32 has been just as strong, setting up the $5 trading range that has been in place for four months.

Novellus Point and Figure Chart

While I'm on the subject of semiconductors and point and figure charts, lets see what Novellus' looks like. The stock did give a buy signal at $51, but just overhead is the bearish resistance line. If semis falter here, Novellus should be primed to fall.

And the Semiconductor Index does look like its four-day run is in jeopardy. Intel had the sector is positive territory for a brief moment this afternoon, but the SOX has quickly reversed course and is down 2.09%. Losing the 50-day moving average, which is 3 points away at 590, would be a bad sign for bulls.

Jeffrey Canavan
Assistant Analyst

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