Trend Not Dell’s Friend
Dell Computer took it on the chin
Friday on disappointing fiscal Q2 sales. In my view, the stock has faces more
pressure in the near future.Â
The direct-seller of personal
computers reported earnings of 22 cents a share for three months ended July 28
vs. 19 cents a year ago and a penny ahead of estimates, according to First
Call/Thomson Financial. Revenue rose 26% to $7.7 billion. Some analysts had
looked for sales in the neighborhood of $7.8 billion.
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The stock has suffered a 37% markdown
from its all-time high. On Friday, Dell shares fell 4 1/16 to 37 11/16 on more
than three times its usual trade. Buyers did come in at the lows, but the stock
still closed in the lower of half of its range.
So rather than giving us a
capitulation sell-off and turnaround in ownership, the stock is inflicting more
pain on existing shareholders. A possible pivot point for shorts would be
Friday’s session low of 36 15/16.
All stocks, of course, are
speculative. On any new trade, be sure to set an initial protective stop where
you will sell your long position or cover your short position if the market
turns against you. You also should limit your exposure with sound
position-sizing. For an introduction to combining stops and position-sizing,
read my lesson, Risky
Business.