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Summary

  • Intel is under accumulation.
  • Market makers are leaving footprints of this accumulation.
  • The big money wants your shares.

Intel (NASDAQ:INTC) is down today. Should I rush to sell my call options? I think not.

Here's some snapshot information:

7/28/2014 10:00AM

Intel 33.95 -.29 (-.82%)

Philadelphia Semiconductor Index (^SOX) 610.85 -5.80 (-.94%)

Dow Jones US Semiconductor Index (^DJUSSC) 1723.09 -14.79 (-.85%)

Nasdaq 4423.90 -25.66 (-.58%)

Micron (NASDAQ:MU) 32.41 -1.01 (3%)

When Intel tracks the SOX on a weak day, I don't have a concern at all. The good news is that Intel often outperforms the SOX on a strong day, hence the 40% price gain since March 3, 2014.

I've included Micron simply to show a condition this is reason to be concerned. Micron is down over three times the decline of the two semiconductor tracking indexes. This is just a data point that can turn around tomorrow.

The other interesting thing that I have noticed about Intel trading recently is that there often are multi-million share trades at or after the market close. The price on these trades is usually higher than what Intel has traded for during most of the day. Not necessarily the high-of-the-day, just higher than most of the volume that has traded during the day.

I certainly can't lay claim to any deep understanding of the macro, micro, strategic or tactical action of the big players in the US stock market. However, I do know that large hedge funds and dark pools can accumulate high percentage positions in stocks without driving the stock price higher, as would be expected.

This is usually done in concert with one or more Market Makers accumulating the target shares throughout the day and transferring the shares in one bulk transaction at or after the close. For example, if I pushed my money around with D10 Caterpillar, I could probably go to a market maker and cut a deal today like, "I will buy all Intel shares you can sell me, up to 5 million shares, at Friday's close of $34.25 or better." The Market Maker then works all his magic tricks (he is, after all, a Market Maker, an expert trader, as it were). I can only imagine some of the combinations of buying and shorting that will shake owners of Intel shares loose, so this market maker can finish the trade with the hedge fund at a $.25-$.30 gain for 5-6 million shares…..That's $1.5 million for a day's work. Not bad.

Of course this all appears as "manipulation" to us Dumbos with shares to sell. In fact, it is the market doing what markets do: manipulate on the short term, if required, to make money for the Marker Maker, and if we are smart enough to recognize the footprints of accumulation by the important money, it will make money for the "smart" Dumbos who don't sell their shares.

You can follow these after market transactions at this site, or CNBC has a cute little downloadable mobile app that gives the pre-open and post-close share volume and price.

If I just looked at the set of data above I would come to the conclusion that Intel is under accumulation and Micron is under distribution.

Even with the short term 40% gain, the action in Intel is just beginning. Buy the shares or buy the call LEAPs, it's a multi-bagger from here.

Source: Intel And Market Action