An AMD/Intel Pairs Trade?
Posted on October 01st, 2005 in Stock Market
Paul left this comment earlier today:
There is talk of INTC being over sold and AMD being over bought - and that they are “Pairing” in opposite directions. I’m interested in shorting AMD - If this interests you could you post a chart with comments.
I can understand why one would want to do this but it’s antithetical to my view of the market. I want to be long strong stocks and short weak ones. AMD does look like it could use a pullback but Intel looks like a dead-cat bounce to me. In fact I suspect that many fund managers are swapping their INTC for AMD. The charts (see below) certainly suggest that’s the case. I’d rather be long AMD and short Intel.
This post has 8 comments
October 2nd, 2005
in the 15 yrs that I’ve been following Intel, any time it trades at a sub-20 PE, you can make money off the stock over a 6 to 12 month time frame. Intel now trades less than 19 times earnings.
The stock now sits at the bottom of an UP CHANNEL that started 9/28/04. Not only that, but Intel, $24.65, is now lower than its pre-9/11 level ($25.60), and is roughly the same price it was in August of ‘97.
Check out http://www.prophet.net ’s java charts to reference Intel’s historical prices.
October 2nd, 2005
Those price levels don’t mean much to me. All that tells me is that business for Intel must suck right now. It’s a different world than it was in 1997 or even pre-9/11. Also that pre-9/11 level doesn’t seem to be very important technically — the stock spent much of 2002 and 2003 (well) under that level.
If the stock can hold above its 200-day moving average for a while I’ll change my tune but for now I’m a bear on it.
October 2nd, 2005
please post a 2yr, or 3yr, INTC chart. You can connect the bottoms in a nice “higher-lows” fashion that goes back to Feb. ‘03, & it shows straight line resistance around $28.50. Pretty cool.
Listen, I don’t think the stock will go back to $72 or anything, but it’s cheap, & strong rallies have begun for INTC each of the last two Octobers. In at $24+, out $28+. Give it a shot.
October 2nd, 2005
It looks broken to me on a 4 year weekly chart as well. Why don’t you create and annotate a long term chart to show me what you’re seeing and I’ll post both your version and my version of that same chart? You can create the chart at StockCharts.com
October 2nd, 2005
Hi Mike.
Looks like we have a nice two-way market between you and One-Way-Stox. Wonder if you would allow a third point of view on Intel. Here is the link for yet another chart on INTC. Cheers! C.Fox
http://www.craftystox.com/blog/intel.htm
October 2nd, 2005
Thanks for the charts guys. I’m going to do a follow-up post tonight with both of your charts and my own weekly chart.
October 4th, 2005
Here’s an article from Forbes about Intel and AMD — ‘Intel Not Inside‘. William Fleckenstein sees things my way — he’s short INTC and long AMD. Great minds!
(I have no position in either stock)
October 4th, 2005
Hi Mike,
Forbes has been bashing Intel for all of this year… even throughout the entire June run-up. I think they have their own agenda. They consistenly publish bearish articles on Intel.
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