Dell Inc

AAA

Commentary: DELL has experienced a sharp decline since breaking below its 200 DMA back in mid-August 2005. But as you can see from the chart below, DELL has bounced off the support of the $28.60 level twice in the past four months, which could now be seen as a sign that the selling pressure may be coming to an end. Note that the price of DELL stopped at a low of $28.62 in early November and a low of $28.69 a few days ago. Technical traders could use these nearly identical bottoms to signal the beginning of a double bottom; as a result, they will watch for a move toward the resistance near $33.

We've also added the MACD, which has recently crossed above its signal line. This bullish sign could be used by the bulls as an indication of a move higher, but what is more interesting is how the MACD has failed to create a nearly identical low like the price of the stock did. This positive divergence also indicates that we may see DELL head up toward the resistance (dotted line on the chart).

DELL_020806.jpg

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