Stock Of The Day: Will Intel Breakout And Rally?

Shares of Intel Corporation INTC are trading higher Tuesday. There is talk that both Broadcom AVGO and Taiwan Semiconductor Manufacturing Company TSM are considering deals that would lead them to buy parts of Intel.

There is a chance that Intel breaks out and continues to move higher. This is why our team of trading experts has made it our Stock of the Day.

Stocks trend higher when there are more shares to be bought than there are to be sold. People who wish to buy are forced to pay premiums and outbid other investors and traders who also wish to buy. This forces the shares into an uptrend.

Resistance is a price level where there is a large amount of sell interest. There are as many if not more shares for sale than there are to be bought. This is why rallies end or pause when they reach resistance levels.

One of the main reasons why resistance forms in a market is because of regretful buyers. These are traders and investors who regret their decisions to buy if the price falls. Some decide that if the stock gets back to the buying price, they will sell.

This will allow them to exit their positions at breakeven.

Read Also: Israel To Begin Negotiations With Hamas For Permanent Cease-Fire, Release Of Remaining Hostages

Resistance tends to form at price levels that have previously been support or resistance. As you can see on the chart below, this is the case with Intel.

Last October, the $22.00 level was support. After the support broke in December, many who bought around $22.00 decided they made a mistake and vowed to get out of their positions at breakeven if they could.

So, when the stock rallied back to $22.00 in January, they placed sell orders. The large concentration of these sell orders formed resistance at the price that had been support.

Intel is currently testing resistance around $26.25. There is resistance here because it was a peak in November. Many of the people who bought at this peak regretted doing so when the price dropped right after.

Now that Intel is back to this price, many of these remorseful buyers are placing sell orders so they can get out at breakeven. This has created resistance at a former resistance level.

If Intel can clear this level, it would show that the people who created the resistance are out of the way. New buyers may have to outbid each other, and this may end up forcing the price higher.

Read Next:

• Warren Buffett Keeps Buying Occidental: Will Q4 Earnings Prove Him Right?

Image: Shutterstock