Keith,
As a long time investor and chart watcher of Dell, I must admit I have enjoyed the posts here. That one from the bear who gave 10 reasons why not to short Dell was pretty funny.
This is definately not a negative Dell site just to enhance a short position and bring along the crowd.
So, with all that being said, I can give you the history of what happens after Dell splits. With the warning that history doesn't always repeat itself.
It has in the past two splits gone up like a rocket right before the split. And, as in the past a lot of Dell owners will wait for any newbies who have been waiting on the side lines to come in because they still see it going up, and now they can afford to buy it. They don't want to be left out of any new run-up.
And on the fourth day after the split takes effect, the owners of Dell stock begin to sell half their positions. Thus the price goes down, leaving those newbies buying in at its all time height.
How much will it go down this time is anyone's guess. The first time they split it, they didn't have the best quarter that year, so it really went down. The second time it split, I can't remember exactly, but I don't think it was more than 20 pts. It had the benefit of a good quarterly report, and never looked back much from that point on.
It took awhile for it to move up, no giant leaps, because there was a lot more stock available too. Again this time, there will be a lot more. Takes longer to move.
Michael Dell has already said that the second quarter is traditionally the slowest quarter for Dell. The warning is out there. But none heeded it. Not with the way the price was moving, who cares?
Keeping in mind that earnings are coming up, so maybe this time the Dell stock holders won't be so quick so sell half their positions, they may wait it out. On the fourth day you should know the trend.
So there's the history. |
