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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Dennis who wrote (76957)	11/7/1998 12:36:00 PM
From: Ron Kline	Read Replies (2) \| Respond to of 176387

Just to clarify the structure of the chart is not really a cup and handle formation. It's a double bottom followed by handle. Double bottoms do not always form handles as in chart of Dell that occurred in Oct-Jan 97/98. You raise a good point about time periods for bases to be formed. It's very important for the base to last 6-8 weeks long, and this is the case with the current chart of Dell. That would be from Aug 27 to Nov 7. A case in point is Dell broke out of a supposed cup formation around Sep 26 but failed obviously due to market conditions, but if you looked at the time of the base formation (only one month) you should have been weary that it might be faulty. Now we can see that it is indeed a double bottom and the time period is within the normal range. The chart is very typical in that usually the second bottom undercuts the first. This is done to throw out all weak hands and start again another cycle. The handle formation interestingly is also used to throw out weak holders. It is characterized by a drifting downward movement of no more than about 10% over about 1-2 weeks of time. During this time volume dries up especially when the stock trades in the lower area of the handle. Handles are great formations in that they give you time to accumulate and breakouts are usually very reliable. Most people get confused during handle formation because they think a stock is acting strange. This is why I posted this info to the board for others to understand why it's acting in this way. One last point, charts alone don't tell you everything so you need to back it up with fundamentals and I think we can all say that in that area not many companies are doing better than Dell right now. Hope this helps, Ron