Have you seen Dell Technologies (DELL) stock lately?

It soared 33% on Friday.

It's up 105% over the past month... and 234% year-to-date.

Dell... the company you bought your first desktop computer from and probably haven’t thought about in 30 years. Up 234% in five months.

As a RiskHedge reader, you’ve seen this type of move so often lately you can probably guess what’s going on: artificial intelligence (AI). Dell makes AI severs and they’re selling in unprecedented quantities lately.

Just like chips, memory, data center equipment, and everything else that touches AI.

Dell’s spike first caught my attention because I (Chris Reilly) am a big fan of legendary growth investor Peter Lynch. In The Millenium Edition of his all-time great book One Up on Wall Street, Lynch shares the 20 biggest winners in US stocks from the 1990s.

Dell is #1. A $10,000 investment at the end of 1989 turned into $8.9 million by the end of 1999.

Back in the present, there’s only one guy I know who anticipated Dell’s stock spike and acted on it: RiskHedge Chief Trader Justin Spittler. His Express Trader subscribers entered the trade on April 14 and still hold Dell today.

I caught up with Justin to find out how he knew Dell would soar seemingly out of nowhere, and where he sees the next big opportunities. I think you’ll find it useful...

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Chris Reilly: Justin, Dell rocketed 33% on Friday alone. It's up over 100% in the past month. Most people think of Dell as a boring tech company, not an exciting trade. What were you seeing in April that made you pull the trigger?

Justin Spittler: The chart was set up beautifully. Dell had broken out of a massive base earlier in the year, spent several weeks…

Chris: Sorry to interrupt, but just to set the stage for readers who might not know you. You’re not a “fundamental” stock analyst. You’re a trader, and price charts are your primary tool for evaluating stocks.

Justin: Right. And Dell had what I call a classic “launchpad setup.” It was consolidating just above its former highs, and its short-term moving averages had caught up to its price. That's exactly the setup I look for. The stock was clearly coiled for a big move.

Chris: So you weren't thinking about AI servers or Dell's business fundamentals when you recommended it.

Justin: I knew Dell was an AI hardware play. That's part of what attracted me to the sector in the first place. But I didn't buy it because of a thesis about AI servers. I bought it because the chart was telling me to.

As I always say, price action doesn't lie. It reflects what investors are actually doing with their money, not what they're saying in interviews or earnings calls. The chart said "buy." So I recommended it to Express Trader members.

Chris: And then last week, Dell reported earnings... revenue up 88%, new AI server orders of $24 billion, full-year guidance crushing every estimate on Wall Street. That's what catapulted it 33% in a day.

Justin: Right. And that's the beauty of reading charts. Most investors react to moves like these. Charts let us anticipate them. The fundamentals confirmed what the chart had already been saying for weeks.

Investors who waited for the earnings report got a much worse entry price. Express Trader members were already sitting on big gains before that report even dropped.

Chris: Let's zoom out, because I think what you did with Dell is secondary to how you did it. You don't just wake up and pick stocks. There's a bigger-picture step first, right?

Justin: Always. Before I look at an individual stock, I ask myself one question: What kind of market environment are we in? That determines everything... how aggressive I am, which sectors I focus on, how much risk I'm willing to take. If you get that question wrong, it doesn't matter how good your individual stock picks are.

Chris: And in mid-April, what was your read?

Justin: The market had just flipped back to "risk on" in a big way. Oil had dropped 19% in five sessions on war de-escalation headlines. The VIX, the market’s fear gauge, had plummeted 43% in a couple of weeks.

Tech was recovering hard, semiconductors were surging, and small caps were back. Money was flowing into all the right places. That's exactly the environment where you want to be aggressive.

Chris: How do you track all of that without getting overwhelmed? That's a lot to monitor every week.

Justin: That's what the PRO Meter does for me. It's a proprietary tool I built that compares "risk on" sectors—tech, financials, industrials, consumer discretionary—against "risk off" sectors like utilities, consumer staples, and healthcare.

It boils everything down into one simple line on a chart. When that line is rising, I'm playing offense. When it's flat or falling, I get more defensive.

Chris: What's it saying right now?

Justin: It just recorded its highest weekly close ever. That's about as bullish a signal as it gets.

Chris: Should readers be buying Dell right now given all this?

Justin: I wouldn't chase it here. Dell has had a great run and Express Trader members have been rewarded. But at this point, the easy money has been made. The better move is to look for the next setup—stocks showing similar characteristics Dell had back in April.

For example, there are two “buy now” picks in the portfolio showing great strength. I send my three strongest trades a week, every Tuesday. So the next issue will release tomorrow.

Chris: Thanks, Justin. The Dell trade is the perfect example of Justin's process in action: Correctly gauge the overall direction of the market first, identify the strongest sectors, and find the stocks coiled for a big move.

If you want Justin's PRO Meter reading every week, and his top three trade ideas based on it, you can learn more about Express Trader here.

We’re currently offering 50% off for new subscribers, for the next couple days only. So click here to see if Express Trader is right for you. 

Chris Reilly

Executive Editor, RiskHedge