I'd Shop Around Before Buying Dell ...
The computer name beat earnings and could see shares up after the open, but the charts give me pause.
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Dell Technologies DELL reported an adjusted earnings per share of $1.89 Thursday night, which beat estimates by $0.18. It posted revenue of $25.03 billion, which beat by $910 million. DELL is trading higher in the premarket Friday.
Let's check out the charts and indicators for some guidance.
In this daily bar chart of DELL, below, I see the price action in DELL through Thursday's close. I have to imagine prices trading in the $117 area. I consider the technical setup of DELL as mixed at best. Prices have been correcting lower the past three months starting with a gap lower at the beginning of June. Trading volume on the decline was fairly active and tells me that investors voted with their feet.
The math-driven On-Balance-Volume (OBV) line made a peak in late May and has worked lower into August. A declining OBV line tells me that sellers of DELL have been more aggressive than buyers. The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero-line.
In this weekly Japanese candlestick chart of DELL, below, I can see the price action of the past three years. DELL made a base in the $40-$30 area back in the 2022 time frame before rallying into early 2024. Prices spiked up to around $180 rewarding buyers who had enough foresight to buy around $40. DELL quickly reversed direction and broke below the rising 40-week moving average line. Trading volume was active on the decline and the OBV line turned lower -- both signs of selling. The candles made a bottom-reversal pattern at the end of July and beginning of August. The moving average convergence divergence oscillator is still correcting lower and is pointed down toward the zero-line.
In this daily Point and Figure chart of DELL, below, I can see a potential upside price target in the $168 area. The pre-market action has not been plotted.
In this weekly Point and Figure chart of DELL, below, I can see a downside price target in the $25 area. I am not sure what prices need to trade at to turn this chart bullish.
Bottom line strategy: Shares of DELL are poised to open higher this Friday and the easy recommendation would be to suggest going long, but I am not so sure. The candles made a low on the chart (above) but saw no other clues that investors were buyers. I think some bottoming action is needed.
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