Dell Technologies (NYSE: DELL) retraced after completing Elliott Wave ((1)) and held support above an invalidation level of $66.34, before rebounding from a “blue box” reaction area. From the Wave ((2)) low, the shares have risen by nearly 170%, with the move described as an impulsive rally that also broke out of a red corrective channel.
The preceding correction is characterised as Wave IV, forming a double three pattern labelled ((W))-((X))-((Y)). The current read-through places the stock in a larger-degree Wave V, with Waves ((1)) and ((2)) marked as complete and price action unfolding within Wave ((3)); an equal-legs extension target has already been reached, though further upside is still anticipated before Wave ((3)) ends. After that, a Wave ((4)) pullback is projected, followed by a further advance in Wave ((5)) of V, while the structure remains above 66.34 and with pullbacks framed in terms of 3, 7, or 11 swings.
Foundations of the Bullish Outlook
We believe the analysis that correctly predicted the 170% rally in Dell remains valid. The stock’s powerful move confirms a strong bullish sequence is in play. This provides us with a clear framework for navigating the stock’s next moves.
This upward trend is fundamentally supported by the booming AI server market, where Dell just grew its market share to 21%. Dell’s latest earnings report showed a 40% year-over-year increase in revenue from its AI-optimized server division. This mirrors the explosive growth patterns seen in other major tech players like NVIDIA during the 2023-2024 period.
Strategic Positioning and Risk Management
Currently, the stock is in a powerful upward wave that we think is nearing its peak. Chasing the price higher right now is risky, so we are not adding new bullish positions at this moment. We anticipate a period of consolidation or a slight pullback is imminent.
Our strategy for the coming weeks is to wait for this pullback, which we identify as Wave ((4)). This temporary dip should present a prime opportunity to enter bullish positions. We will be watching for signs that the correction has found a floor before acting.
Once the pullback shows signs of ending, we will look to buy call options or sell out-of-the-money put spreads. These derivative strategies offer a way to capitalize on the expected next leg up, which we call Wave ((5)). Given that implied volatility is currently elevated at over 45%, we prefer strategies that benefit from a decrease in volatility once the trend resumes.
The entire bullish outlook holds as long as the price remains above the $66.34 invalidation level. Any derivative trade should use this price as a critical reference point for managing risk. We expect the final wave up to carry the stock to new highs before this larger cycle completes.
