Dell stock has rebounded off the fourth-quarter lows, but the shares remain below resistance. Here’s how to trade it from here.
Tech stocks have been trading pretty well lately, and many investors are wondering whether Dell (DELL) – Get Free Report will join in.
That sentiment comes as the computer maker makes the list of tech companies that are reducing their workforce. It plans to cut more than 6,600 jobs.
So far, it’s not helping the stock much, with the shares down about 3% at last check. That said, the stock ended Friday trading down only slightly (0.4%) when the market finished considerably lower.
For instance, the Nasdaq fell 1.6% on Friday following earnings from Apple (AAPL) – Get Free Report, Amazon (AMZN) – Get Free Report and Alphabet (GOOGL) – Get Free Report (GOOG) – Get Free Report (which had reported on Thursday evening).
In the case of Dell stock, the shares lately have traded well but have not enjoyed robust gains. At last week’s high, the stock was up more than 30% from the fourth-quarter low. That’s pretty solid, even though it lags stocks like Nvidia (NVDA) – Get Free Report, which has more than doubled off the fourth-quarter low.
In the case of Dell stock, the value-to-growth proposition is different. The hares trade at just 5.4 times this year’s earnings, while the stock pays a dividend yield of 3.25%.
Is that enough to draw in buyers? Let’s look at the charts as Dell stock struggles with resistance.
Trading Dell Stock
Daily chart of Dell stock.
Chart courtesy of TrendSpider.com
Rallying off the October low, Dell stock did a great job climbing to the 200-day moving average, 61.8% retracement and downtrend resistance (blue line).
But these measures were resistance at the time (in late November and early December) and have remained resistance since.
With Monday’s pullback, Dell stock is breaking below the 10-day, 21-day and 50-day moving averages.
It’s not the best setup out there. But so long as Dell stock can stay above uptrend support and the January high, the bulls can justify taking a long position.
The stock has been chipping away at resistance. If it can clear the $43.10 level, Dell stock will clear last week’s high, as well as the January high. That opens the door to the $45 to $45.50 level, followed by the gap-fill at $47.15, then $48-plus.
On the downside, a break of $39 would be a bearish development, as it puts Dell below last month’s low.
Traders are stuck between both levels now. They should keep a close eye on $39 on the downside and $43 on the upside if they are active in Dell stock.