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Street responds to tech earnings

The Street reacted strongly to earnings reports from two of the tech industry's biggest players.

IBM (IBM-N) shares closed higher after beating Street estimates in the last quarter. Generally technology stocks don't fare well after the consumer electronics show wraps-up in sin city -- but technical and seasonal analyst Don Vialoux tells me today when it comes to big blue, the love affair continues into Valentine's Day.

But he points out that while the stock is trading above its 200-day moving average, it was below the 50-day moving average. That is, until Wall Street had a chance to reward the company for its better-than-expected bottom line. The 50-day moving average is $185.20, but I'm sure Mr. Vialoux would remind me that you need to trade above resistance for about a week or so -- and there must be volume to support that level before resistance becomes support.

Vialoux's preferred strategy when it comes to big blue is buy closer to the red line. He says you can buy on weakness closer to support on that 200-day moving average at $175.46.

Analysts are split on whether or not you should buy shares today. Half of the Street has a 'buy' recommendation and the other half says 'hold'. The consensus, however, is 12-months out the stock should be about $10 richer than it is today. But the three most recent ratings vary wildly. BMO Capital has a 'market perform' and a $192 handle on the stock while SocGen says don't buy more -- it's only going down from here. They're worried about a host of things including a slowdown in industry spending. Goldman Sachs is far more bullish -- with a 'buy' rating and a prediction the shares will be worth more than $200 in a year.

Intel (INTC-Q) also reported stronger than expected fourth quarter results this time yesterday -- and the Street is increasingly concerned about where the stock goes from here. That's what is behind the downgrade at Kaufman Brothers from 'buy' to 'hold'.

Vialoux points out the stock has outperformed the S&P 500 but the short term momentum indicators show the stock is overbought and recently rolled over. The technicals appear stronger for Intel than they do for IBM. The stock is well above its 50-day moving average at $24.49 and that's also above the 200-day moving average.

The technical whiz says if you want to buy Intel, there's a better entry point than today. He's advising you buy on weakness with support seen on the shares around $23.

Meantime, Intel has named Brian Krzanich to the position of chief operating officer. He comes from the company's manufacturing and supply chain division -- and while having a man who knows how to keep the company humming is critical for a COO post, the company insists despite all reports that this is not about CEO succession for Paul Otellini.

Much like big blue, the Street is split on Intel. BMO believes the shares are overvalued and likely to fall to $24 in the next year. Deutsche Banke is more optimistic -- predicting a $30 price over the next 12 months. So is RBC Capital Markets -- they've got an 'outperofrm' rating on the world's biggest maker of computer chips. They've also got a $30- target on the shares.


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