VMware Inc. in a holding pattern.

Jun 13th, 2011 – 1 Comment

The next flex point we know of is the release of Q2 in July, until then its a game of wait and see.


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VMW – VMware

Susan

 

Hi Susan,

VMware Inc. (VMW NYSE) has been on the move since it recovered from the late 2008 lows where it traded below $20.00. Some of the recent advance has been fueled by the company’s exposure to the excitement surrounding cloud computing.

The last time I ran the charts for VMW was in April of 2010 in a special feature for globeinvestor.com. Back then it looked like the shares might pull back but that the advance still had legs. After testing support on the 50 day moving average the uptrend continued. Here’s a link to the analysis from last year.

http://www.theglobeandmail.com/globe-investor/e-zines/trade-by-numbers/three-technology-picks-to-light-your-way/article1525265/print/

Lets review the charts to get a new perspective on the stock.

The three year chart delineates the sweet run that VMW has enjoyed from the late 2008 lows. The continuous test of support along the 50 day moving average signalled that investors were willing to buy on the dips and take the stock higher.

The advance  through 2009 and 2010 was supported by earnings that beat the street three out of four quarters for the period Q3 2009 to Q3 2010. However that streak was broken in January of 2011 when Q4 earnings missed forecast.

The next quarterly report for Q2 2011 is scheduled to be released on July 19, 2011. Make sure to put that date on you action calendar.

The six month chart provides a close up of the selling that came into the stock in January of 2011 ahead of  Q4 earnings which missed the forecast. Which is another example of guys in the know, knowing what to watch. The RSI and MACD both signalled a change in momentum to the downside as the shares breached the uptrend line. The pull back took the stock from $97.50 to $75.00 by mid March. A contraction of 23.07%.

VMW did recover from the mid March lows but once again met resistance at $97.50. Currently the shares seem to be range bound with resistance at $97.50 and support at $92.50. Neither of the indicators are suggesting a break out of the range. The next flex point we know of is the release of Q2 in July, until then its a game of wait and see.

Make it a profitable day and Happy Capitalism!

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