Intel/Nvidia – Interesting Week
My thesis regarding Intel/Nvidia has a key development possibility, this week. While my belief in and trade position would benefit nicely if something plays out this week, it is more likely to take a few months at least, to develop.
The chart says that INTC could break out anyday now. This Friday, is supposedly the day that the deciders on changes to the DJIA index would make their decision, if there is going to be a change at this time. I believe it is only a matter of when, not if, NVDA gets added to the DJIA.
I suggested that the short time frame from when Nvidia announced their 10-1 stock split to the actual implementation, was because the DJ index deciders suggested as much because they are going to make the change this week.
So, either NVDA announces a deal to buy Intel and they eventually gain the spot in the index when the deal closes, or more likely, DJ announces they are adding NVDA and dropping INTC.
That might cause Intel to drop for a day or so, but as I pointed out in my previous post on this topic, the stocks added to the index usually under perform in the next twelve months and those dropped from the index out perform. In both cases reversion to the mean from their previous 12 month performances, that led to the change in the first place.
Should be an interesting week for these two stocks.(This is not investment advice, just my opinion.)