Intel Corp. stock has been rising steadily since August 24th, when prices fell as low as 24.86 dollars a share. Yesterday, the stock closed above 34.70, following the news that Intel will acquire Altera Corp. for $16.7 billion. However, we believe it is not news and events, which drive the stock market to move, but psychological factors. According to the Elliott Wave Principle, the interaction between optimistic and pessimistic traders and investors creates repetitive patterns, visible on the charts. Being able to recognize these patterns allows us to form our own opinion. So let’s see what the 4-hour chart of Intel is showing.
As visible, the whole recovery since August 24th could easily be counted as a five-wave impulse, which means the larger trend is up. But first, the theory states that before prices start rising again, it is time for a three-wave pull-back. So, instead of following the positive news and going all-in into Intel, investors should probably be careful, because a decline of more than three dollars a share is likely to occur soon.
