INTC an Earnings Trade?

This is not one I'd expect a leak from, although people didn't expect Enron or global crossing either. There's also the chance that some very good analysts are ahead of the curve on INTC, but they report after the close and here's what 3C looks like. Remember, earnings trades are highly volatile as this reports after the close, a big surprise could send it gapping in either direction so if you play it, play it safe with speculative trade risk management. Also judging by the last time we did this, the probabilities are not in playing just one earnings pick, but several as the success rate was not perfect but very high. Also these tend to be short term trades as a big drop in price will lead to an oversold bounce. If there's an opportunity for a trending trade, that must be analyzed on it's own.

INTC charts

Looking at the negative divergences in red and positive in white, watch what happens to price right after on this 60 minute chart (price action in the boxes). This 60 min chart doesn't look bad, the trade is not based on this chart.

Here's the 15 minute chart. Note the last top at the first red arrow (negative divergence) sent price lower. In January there was some accumulation at the lows and we have since seen a fairly heavy volume rally. Currently there's the start of a 15 minute negative divergence.

The 10 min. chart showed confirmation at the green arrow which makes sense with the 15 min chart above as the negative divergence on the 15 min chart is recent. This divergence is pretty clear and into lateral trend movement where divergences often occur.

The 5 min chart is showing distribution the last few days. This could be for a number of reasons including people not wanting to be in the trade during earnings, however, it's hard to ignore and this is a big company so to move 3C, a lot of shares must have been sold.

Based on the above, I'm bearish on the earnings outlook for INTC-this does not mean I think they will beat or miss, just what price may do after earnings. We all have seen a beat, then a conference call that disappoints and sends shares lower. I'd give this 3 of 5 stars for a short side trade. You may also want to wait until after earnings are announced, but be ready to move quickly should price fall-that would carry less risk.