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Dell Computer raises guidance by a penny

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Shares of Dell Computer (NASDAQ:DELL) have seen a rise in volume after the company said it was raising guidance for its 4th- quarter. Dell said it was raising earnings guidance to 17-cents vs. consensus estimates of 16 cents. The company also guided analysts higher on revenue to the $8 billion level, compared to consensus estimates of $7.67. While the volume has picked up in the stock, the shares currently trade lower by $0.34 at $28.61.

Dell Computer Chart - Daily Interval

I mentioned the increased trading activity in shares of Dell (DELL) in the market monitor and higher guidance, but the technicals make for poor risk/reward assessment. Retracement dating back to 2000 show the stock recently entered what I would consider a "zone of distribution." With the bullish percent indicators indicating caution, we passed on any type of trade (bullish or bearish) in the stock. I do however feel that bears may be attempting shorts in the stock and targeting the $26.50 level. MACD on the daily chart is rolling and remains below its signal, thus bulls trying to buy today's news need to be careful.

Consumer confidence

The University of Michigan consumer sentiment index rose to 94.2 in early January from 88.8 in December; this is better reading was better than consensus estimates of 90.0 and provides evidence that the consumer remains upbeat.

Stocks firmed from their early morning lows on today's consumer confidence news, but that was about it.

Treasury bonds did see a knee jerk reaction and saw some selling, but have now drifted right back to the unchanged level. The 10- year YIELD came very close to piercing the 5% YIELD we are monitoring closely, but managed to see YIELD rise to 4.983%, before buyers stepped in and YIELD has now drifted back lower to 4.933%. Action in the bond market is still tilted toward a defensive posture and equity traders/investors should be rather defensive with stock positions.

Jeff Bailey
Senior Market Technician
Option Investor

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