VMware Inc. (VMW) was reviewed in late January, where I wrote, "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 to a close below $125." I also added that "A tentative longer-term price target of $171.78 is indicated (from the Point and Figure chart). A decline to $126.18 is needed to suggest some weakness on this chart."
Looking at this first chart of VMW, below, we can see that prices continued sharply higher into late January missing our $171 price target but then reacting lower to break our stop loss point but finally stopping at the rising 200-day moving average line around $109. The volume of trading was very heavy at the end of March as prices moved sharply but notice the overall movement of the On-Balance-Volume (OBV) line -- the OBV line only made a relatively small decline into early February and has firmed again. A rising OBV line is a sign that buyers of the stock are more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator has narrowed recently and could cross to a take profits sell signal depending on the price action in the days ahead.
In this weekly bar chart, below, we can see that the price of VMW has tripled over the past three years. The rising 40-week moving average line was tested successfully in February and March. The weekly OBV line rose for much of the price advance but has corrected lower since January. It looks like the line is turning up again in April. The MACD oscillator on this longer time frame is turning up for an outright go long signal.
In this Point and Figure chart of VMW, below, we can see a new upside price target of $176.45. A rally to $139.38 should refresh the uptrend and open the way to further gains.
Bottom line: Traders looking to go long should buy strength above $140, risking below $120 looking for gains to the $175 area in the weeks ahead.