Intel Is Up 20%+ on the Nvidia Deal. What Does Its Chart Say?

Struggling Intel INTC had its best market session in nearly four decades the other day when Nvidia NVDA unexpectedly announced plans to invest $5 billion in the company. Does INTC's chart show this is the start of an uptrend -- or just a short-term rebound?

Let's take a look:

Nvidia's Intel Deal

I'll admit I didn't see it coming when Nvidia and Intel announced a headline-making deal last Thursday to jointly develop PC and data-center-friendly chips.

As part of the agreement, Nvidia announced a $5 billion investment in Intel at $23.28 per share, pending regulatory approval.

Intel shot up as much as 30% intraday on the news -- its biggest one-day percentage gain in 38 years.

Nvidia gained 3.5% as well, while INTC rival Advanced Micro Devices AMD briefly dropped 5.8% intraday. AMD competes directly with Intel for share in the PC/CPU business, while also providing the only real competition to Nvidia at the AI/data-center design level.

As for Intel, it's since given back some of last Thursday's big gains, but was trading Wednesday afternoon at about $30.80 a share. That's up some 23% since the Nvidia announcement, as well as 74.3% from the stock's $17.67 52-week low set on April 8.

Intel's Technical Analysis

Now let's take a look at INTC's chart going back some nine months and running through Thursday's close:

What readers will see here is a so-called "flat base" for the stock that ran for more than 12 months, with a $27.55 pivot.

Intel broke out of that in response to the Nvidia news, but investors have to be cognizant of the looming halfway-back point -- a 50% retracement of the stock's December 2023-April 2025 sell-off.

That spot, which stands at about $34.50, has potential to show resistance in the face of Intel's sudden surge.

Most Fibonacci retracement models include 50% retracements even though they're not actual Fibonacci levels. Twelfth-century Italian mathematician Leonardo Bonacci never included a 50% retracement level for his sequence.

However, that does not make them any less real. So, if the halfway-back point presents potential resistance for Intel, where does the stock's support level sit?

Potentially at the old flat base's upper trendline, which was Intel's old pivot of $27.55.

An Options Option

Options traders who want to get long on Intel, but not get picked off close to potential resistance often employ a simple buy-write strategy.

This is accomplished by buying INTC shares while also decreasing net basis by writing a call with a higher strike price.

Here's an example:

-- Buy 100 shares of INTC at about $32.

-- Sell (write) one INTC Oct. 24 $34 call for about $2.

Net Basis: $30.

A trader wanting to lower cost basis even more might consider one additional step. They could write a put with a strike price down around the stock's potential support level if the trader is willing to add to their long INTC position at that price:

-- Sell (write) one INTC Oct. 24 $27.50 put for roughly $0.85.

New Net Basis: $29.15.

(Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle had no position in INTC at the time of writing this column, but was long NVDA and AMD.)

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