Mohan:
For private use only
From Briefing.com
Dell Computer (DELL...82 5/8)
Dell Computer designs, develops, manufactures,
markets, services and supports desktop and
notebook computer systems, as well as network servers...
Stock split 2-for-1 on 3/9/98... Year-to-date DELL is up 96.7%...
Trading Points
Since releasing better than expected earnings
on an impressive jump in revenues, Dell's stock
has headed due south... Question investors have
to ask is whether the current retreat represents
a change in Dell's long bull trend, or if this
is nothing more than a good buying
opportunity... We maintain that the retreat
is simply a normal, healthy pullback that has
alleviated the s/t overbought condition which
grew out of the pre-earnings rally... A look
back at the stock's 5 most recent corrective
periods (see table below) lends support to the
view that now is a good time to consider (re)entering
the long-side.
Length of
Corrective
Phase (in
days)
% Decline
Subsequent %
Gain
Length of
Rally (in days)
10 (3/2/98-3/12/98)
15.2%
61.5%
44
11 (12/8/97-12/19/97)
21.8%
91.2%
48
12 (10/16/97-10/28/97)
29.7% (Asian scare)
31.8%
48
17 (7/25/97-8/11/97)
13.5%
38.5%
29
24 (12/09/96-1/02/97)
22.5%
248%
143
Averages
15
20.5%
94.2%
62
Using Monday's low of 77 1/4 as the
corrective floor, the current pullback
measured 21.6% over a period of 19 days.
In other words, Tuesday's 4+ point
gain may have marked the beginning of the
stock's next major up move.
Assuming the averages hold, Dell would be
trading near 150 within the next 62 days... Even
if you drop the subsequent percentage gain and
length of rally of the fifth period, based on
the unusual scope and length, you would be
looking at a 55.8% gain over a 42 day time
frame (which would target 120 3/8)... Either way
sounds incredible, but that's been the stock's
amazing history.
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