Get Intel in your portfolio. Sometimes market participants forget we’re in the market to make money. Contrary to the cacophonous media echo chambers, we’re not in the market to be right or wrong. Media may love opinions, but markets couldn’t care less about what we think. Markets are not our friends. They don’t care if we’re right or wrong, so we better be in the business of getting on the right side of the trade, managing risk, and capturing reward. With this in mind, it makes sense to own things moving up in both absolute and relative terms. Price moving upward in absolute terms is nice, but capturing trends that are moving up faster than the market itself can set our portfolios up for outperformance. One such opportunity we’ve identified is Intel (ticker: INTC). For over a year, INTC has done jack squat. Price has moved between $33 and $37 per share in a battle between supply and demand. This sideways consolidation has built a nice base right above the 2014 highs. From long bases, come high spaces. Let’s dig into the data.

To get a big picture perspective of Intel, here’s a weekly chart INTC:

Notice how INTC has been a large scale uptrend for a while now with massive two-year accumulation pattern (annotated in purple) which took it to new highs. Since the 2016 high, however, INTC has been consolidating sideways. The one-year supply and demand battle is normal and healthy price behavior. We also notice that from a relative performance perspective (upper pane), INTC has broken its relative downtrend versus the S&P 500 (using SPY as our proxy). This is a new piece of evidence squarely the court of owning INTC.

Now, let’s get a little more tactical with a daily chart of Intel:

Not until recently did INTC breakout from this sideways consolidation and breakout from a downtrend relative to the S&P 500. This is quality accumulation and change in relative trend behavior. Our number one responsibility when taking on a new position is risk management. Monitoring supply and demand allows us to identify when we’re wrong. When we can identify our risk (and reward), it allows us to determine whether the new position is worth the risk. In this case, we know we’re wrong below $35.80, which is 3% below current price and defines our risk. On the flip side, the upward target is $43 (it could go higher), which is about 14% higher from here. Risk of 3% and reward of 14% (or higher), which is a risk/reward ratio of almost 1:5. Not too bad.

In conclusion, the game plan is simple: we’ve identified an opportunity with a 1:5 risk/reward ratio. Above $35.80, it makes sense to own INTC. Below that and someone else can have it. Everyone is different. Know your time frame. Trade at your own risk.