We reviewed VMware (VMW) in late October, when I wrote, "The trend is still up for VMW. If you're buying VMW or adding to existing positions I think you have to risk a close below $110, which is where the 50-day moving average line intersects." We had price targets in the $150-$160 area which are still possible and not all that far away now. Prices are still above the rising 50-day moving average line but some of our other indicators have started to show some non-confirmations. Let's check things out.
In this daily bar chart of VMW, below, we can see that prices are not extended above the rising 50-day moving average line but they are well above the rising 200-day line. The volume histogram is interesting with a big volume surge at the end of November and early December. Volume declines from that point even as prices move higher -- not the ideal picture of a strong rally. The daily On-Balance-Volume (OBV) line rose for most of the past twelve months but turned flat since early December. A rising OBV line signals more aggressive buying but a flat or neutral line suggests a balance between buyer and sellers. The Moving Average Convergence Divergence (MACD) oscillator is rising above the zero line -- a bullish configuration.
In this weekly bar chart of VMW, below, we can see that prices are above the rising 40-week moving average line -- maybe too far above the line. The weekly OBV line has been strong and suggests that buyers of VMW on this time frame have been aggressive. The bottom panel with the 12-week price momentum study shows that momentum has been slowing since an October peak. Momentum is a leading indicator and momentum typically peaks before prices peak.
In this Point and Figure chart of VMW, below, we have a bullish picture. A tentative longer-term price target of $171.78 is indicated. A decline to $126.18 is needed to should some weakness on this chart.
Bottom line -- VMW is still in an uptrend and has weathered a number of pullback and corrections the past two months. Some signs of more aggressive buying would help the technical picture but in the meantime raise sell-stop protection fo a close below $125.