Pendulum Swings From H-P to Dell

Dell is expected to report EPS of 41 cents Thursday. After two disappointing quarters in a row, I expect Dell's report to be upbeat given the strong demand for consumer electronics. Dell is rated a hold by ValuEngine. It's 22.7% undervalued, with fair value at $41.14. The weekly chart profile shows rising momentum, with the five-week MMA at $30.55 and the 200-week SMA at $32.95.

Investors should add to this holding as long as weakness holds the five-week MMA. More shares should be bought if it falls to my monthly value level of $26.81, which would be a new 52-week low. The upside is to my monthly risky level at $34.27, then to my semiannual risky levels, $38.59 and $39.45. Dell broke below its 200-day SMA in August. The SMA is now at $34.86.

I believe H-P could decline to its 200-day SMA at $26.72 and Dell could rebound to its 200-day SMA of $34.86. This suggests it makes sense to overweight Dell vs. H-P.

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