With the fall, shares broke below several key layers of support, putting the stock in question as we head into the final month of trading for 2019. A mixed quarter doesn't help sentiment, nor will management's outlook as investors try to digest the quarter and decide if Dell stock is worth buying.
Earnings of $1.75 a share topped analysts' expectations by 16 cents, while sales of $22.93 billion grew 1.2% from a year earlier but missed estimates by $100 million. Investors may have overlooked the third-quarter revenue miss if management had not trimmed full-year guidance.
The company now expects sales in the range of $91.8 billion to $92.5 billion, short of consensus expectations at $93.5 billion. Making matters even more mixed? Dell raised the lower end of its prior earnings outlook, now expecting full-year earnings in the range of $7.25 to . per share.
Let's look to the chart to see if it lends any more clarity.
Trading Dell Stock
I was taking a look at Dell stock ahead of the print and viewed it as a very binary situation. On the downside, Dell had its 50-day and 100-day moving averages at $52.43 and $52.38, respectively. On the upside, it had the 200-day moving average near $56, a level that had come into play as resistance a few months ago.
Closing in between this range ahead of its third-quarter earnings, shares either needed to breakout over resistance or breakdown below support. The latter is playing out now.
Adding extra significance to $52.50 area, Dell stock also had an uptrend support mark in play (blue line). However, that does not seem to be helping on Wednesday.
We now need to see what Dell stock does from here. It's rallying nicely off the lows and if it continues to rebound, bulls need to see if the 50-day and 100-day moving averages are reclaimed or if they act as resistance. If it's the former and Dell hurdles the $52.50 level, then bulls can look for a possible rebound to its pre-earnings level and a potential rally up to the 200-day moving average.
On the downside, if Dell stock takes out the Wednesday low just below $50, shares may decline to the October lows near $49. Below that and it may continue filling the gap down toward $47 from September.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.