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Dell Swell


Here's a typical comment from sell-side research analysts this AM on Dell's (DELL) reported results:

"Overall pretty upbeat on the numbers, although acknowleding stock could be weak on slight rev miss. Many noting that EPS upside from lower tax rate. Positive on gross margin performance. Weakness in U.S. consumer biz responsible for rev shortfall."

We cite the above not because it is in any way incorrect, but simply to illustrate the very point we were trying to make yesterday with regard to how variable the interpretation of fundamental data can be. As behavioral economists have shown, the interpretation of actual data in an economic setting can vary widely, depending on many factors, not least of which is the overall environment in which the reviewer finds himself as well as his/her specific evnironment at that precise time. Multiply this by millions of times (for all the many interpretations of DELL's results that have taken place in the last 16 hours) and you can see why I claim that it matters little what the 'actual' data is.

What matters is the overall psychological state in which those results are fed. And limning that overall psychological state is what we are attempting to do when we look at the price of the security alone. I show DELL bid at $40, down 3.78% from last night's close. Were these results disastrous? Of course not. But that doesn't matter. Lower projections, if DELL declines below its $39.77 low from Jan 18th, 'point' to $39.08 minimum and if that doesn't hold $37.45. Should be an interesting day for this security.
No positions in stocks mentioned.

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