PriceTime-Review's: LONGWAVE TRENDS
Intel Corporation (Nasdaq:INTC) From 7/1986-8/20/2004 UPDATED 11/24/04
LOG AND LINEAR SCALE CHARTS WITH MEAN
REGRESSION CENTER LINE, RATES, TRENDLINES, CHANNEL LINES, RATIO ANALYSIS
AND PROJECTIONS BASED ON A DOUBLE REGRESSION COMPARISON TO HISTORIC RATES
RETURNED BY SIMULAR STOCKS AND INDEXES:
Rate chart is at the bottom of this page
Standard Introduction for Longwave rate analysis. Current comments and chart are below.
As with all longwave projections, we will start out by plotting
the existing price-time chart for the longest time period that we have data
available for. That plot will be made in semi-log and linear scale, but
the main analysis will be made in log scale since it is much more likely
that we will be able to see some actual longwave trend lines, if any exist,
in that scale. As explained in our Longwave and Fibonacci introductions, stocks charts have a very
strong tendency to produce an exponential growth curve, and those curves will
appear as straight lines in semi-log scale but will appear as steeply rising
curves in linear scale. After we have plotted the longwave stock chart, we will then
plot some "lines" to represent the longwave rates of return on invested capital
excluding dividends (ROROICED) that some similar stocks and will know market
indexes have "actually" returned over many years. We will then compare our
stock under review with those other rates and make some "logical" estimates of how likely
this is to "regress" toward one of those other rates, continue
on it's current rate line, return to a prior rate line, or move on to something
totally different.
Needless to say, there is no guarantee that any individual stocks
will now, or even eventually, fall within the long term mean or actual rates
of return delivered by similar stocks or indexes over their long term period.
Never the less, it is very logical that similar type stocks will "eventually"
do just that, as statistical analysis has shown that most "functions" based
on nature or human activity do eventually "regress to mean" as well as show
a tendency to "group" within the bounds of similar functions. That is especially
true when an individual component is part of the larger group under review, as
most stocks are part of the industry, group, or index which we compare them with.
INTEL: POSTED 8/20/04
While it is not shown on these charts,
Intel has fallen below the key Gann angle of 1:1 (45 degrees in the correct
scale) coming up from the 2002 low, which is now at "about" $35 when using
Mr. Gann's weakest chart scale of one point per month. While that would earn
Intel a classification of "bearish" by most Gann traders, the stock is also
"just hanging" below the Gann 1:2 angle coming up from that same low, which
is now at "about" $24, and this would earn Intel a classification of "very
bearish" IF it fails to break back above that 1:2 angle. Of course, the Gann
angles are an excellent short term trend indicator, but rarely work beyond
a few years because they are applied in linear scale.
There is no long term mean, standard deviation, or extreme
boundary trendlines shown on this graphic, since they would cleanly only
be valid for that last long trend up, a "spur trend," connecting the low
in 1983-1986 to the all time high (ATH), in 2000. Since the Longwave
main trend is "extremely likely" to be well below that "spur," any mean and
trendlines draw now would be very unlikely to have any meaning in relation
to the overall trend "projection" beyond 2000.
The 48% and 54% annually compounded rates of return (excluding
cash dividends) that Intel has returned since late 1973 are shown in black
text on the graphic below. Also, we have shown the rates calculated
from the beginning of our actual data, in July 1986. We have also placed
some rate lines for the three major indexs and one other major "old" technology
stock, IBM, on this same graphic. I would also note that if we had
placed a rate line for Hewlett-Packard and Motorola on this graphic, two
other "old" or "mature" technology stocks, they would have been very similar
to IBM.
We do not know when Intel went public or at what price, however,
we do have the company's own record for stock splits, and from that we can
calculate an approximate price that will have a very small possibility of
error. Our first real data record is from Yahoo, and it recorded $19
in July 1986. Using the stock splits, we find that Intel was "near"
$.75 per share in July 1973, and we used this as the "start date" for our
our longwave rate calculations. Using the split ratios, we find that
Intel was "essentially" worth $93, 825 per share to someone who purchased
the stock at $.75 per share in 1973. That equates to an annually compounded
rate of return on capital of about 54%. Using the same method, we find that
Intel is still worth $26, 271 per share to those original stock investors
and that yields about 40% to "today's" actual stock price of $21. This
same $21 is "about" a 23% rate when calculated from the low shown in 1986.
While I do not know which "rate line" Intel will eventually
gravitate to, I have to assume that it will be lower to much lower then it
is now; eventhough, I have no assurance that it will not go up before it
goes down, or even go sideways before it goes down. As a matter of
fact, we "expect" Intel to make one more "good" rally up, to or near that "B" wave
top, before the real damage begins.
All in all, from what I see here, it appears "to me" that
INTEL will eventually make its way to either a 10% or 15% rate line, from a 1986 low, depending
on whether it continues to pay a very minimal (.7%) dividend or increases
that payout to a more normal market rate, since higher dividends produce
lower stock prices over the long term. However, when I include other analysis
into the mix, it appears that the most likely target will be for INTEL to
make the Fibonacci number lines at $5 or $8 sometime in late 2006, which is also
'near" a 50% retracement of the entire longwave "spur" trend up from 1983-1986 to 2000,
in log distance (percentage) terms. While any estimate is always going to
be subjective, we currently estimate that INTC will have a 75% probability
of reaching that $5-$8 target area in 2006.
