A Day With Dell Computer
I was curious to see how
Dell Computer (DELL)
would behave after being upgraded to outperform from neutral by Morgan Stanley
this morning. Dell has been hovering around its 50-day moving average the last
few trading sessions, but never had a successful breakout above the average. The
chart below is a five-minute chart of Dell from today’s session (6/12/01).
The red horizontal line shows the level of the 50-day moving average, and the
dark blue is a minor resistance level established in last five trading sessions.
As you can see, shortly after the open Dell had a breakout failure. Needless to
say, this was the first selling opportunity. Pullback traders also had a chance
to short the issue around 11:10 a.m.
About 12:55 p.m., Dell broke out above the intraday declining trendline. Finally,
at 2:45 p.m., Dell broke out above the 50-day moving average. Look how heavy
volume was. But shortly after the breakout, Dell hit resistance. Sellers moved
in, and the issue closed just above the 50-day moving average. For tomorrow, I’m
looking for a potential breakout above resistance.