Watch Dell Breakout Above $17.50


Dell (NASDAQ: DELL) with its broad range of products and services is well positioned to continue to profit from technology products and services sales.  Earlier this week the company announced it is paying $700 million in cash for Force10 Networks Inc., a maker of high-speed Ethernet networking equipment.  The move further shows Dell’s commitment to remain at the forefront of the businesses it is in and to act acquisitive if it finds a good opportunity.  

On the weekly chart dating back to early 2008 we note a clear multi-year resistance line at $17.50, which acted as resistance in late summer 2009, in April 2010, and again this week.  The more a level gets tested the weaker it gets, so the probability that the stock will manage to break through $17.50 is increasing.  Never the less, Dell (NASDAQ: DELL) is up close to 25% this year so a little breather before it breaks higher may be needed.   


Looking at the daily chart dating back to January 2011, note the up-trending channel that has formed since April.  If the stock wants to make a serious run at breaking the $17.50 area the lower support line of this channel must hold as support.  Stochastics on the daily chart have come back some and act supportive of a move higher.  While this trade may not be today’s business and Dell (NASDAQ: DELL) announces its earnings in mid August, a solid daily close above multiyear-resistance at $17.50 on good volume would be bullish.  If and when this setup should complete stops can be set at $16 and final profit targets at $20.

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