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Midday Market Update, Monday, 6/18/2001 - 1:30 pm ET

Market Commentary

I hate it when my computer crashes

A review of some computer stocks shows they may be getting ready to crash.

Dell Computer Daily Chart

Starting with a chart of Dell (NASD:DELL) we can see a bunch of lines all over the place. The long green line was the up trend that Dell had been in this year, that is until last Friday. The next line is downward sloping red line that has marked the downtrend Dell has been in since April 20th. A brief attempt was made to break that trend, but the 50 and 200-dmas stepped up to quash any rally attempts. Dell now sits just above the horizontal blue line at $24. This line has helped to support prices for the last two and a half months, and is being called upon once again. If this line cracks, it could be down to $21 - $20 for Dell (purple lines). At least the Chart is colorful.

Apple Daily Chart

Apple Computer (NASD:AAPL) has also broken its yearlong up trend, and is now in a steep downtrend. Prices have managed to consolidate between $19 and $22, but the downtrend and both moving averages are going to try and push AAPL lower. Support below looks evenly spaced out at $18, $16, and $14 if support at $19 is lost.

Compaq Computer Daily Chart

Unfortunately Compaq Computer (NYSE:CPQ) doesn't have as many support levels left. Compaq's run ended quickly in February, and has been heading lower since. CPQ tried to rally in April, but an island reversal (gap up then gap down) ended that. This stock looks like it has a tendency to print island reversals, so I would be wary about buying any upward gaps.

Gateway Computer Daily Chart

Lastly we have Gateway (NYSE:GTW). Gateway has been the least active of the computer stocks, and has been ambling between $15 and $20. After falling from its high of $73, it needs to build a little base until it gets back on track. But can it hold above $15 remains the question.

Jeff Canavan
Assistant Analyst


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