VMware Inc. (VMW) is soaring higher ahead of the opening Monday, after Dell Technologies Inc. (DVMT) said it would offer to swap stock that tracks its VMW subsidiary for either cash or shares in the computer group controlled by founder and CEO Michael Dell.
We looked at the charts and indicators of VMW on June 20, and noted that, "Traders could remain long VMW but they should consider raising sell stop protection to $135 from below $130. The $175-$178 area is our upside price target." With prices indicated around $163 Monday morning a fresh look at the charts and indicators seems in order.
In the daily bar chart of VMW, below, we have to imagine the upside price gap that is probably going to happen this morning. Prices will remain above the rising 50-day moving average line and the bullish 200-day line. The daily On-Balance-Volume (OBV) line has been steady since February and it might make a new high for the move up if there is heavy enough volume today. Heavy volume on a day when prices close higher is a sign of aggressive buying.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since the middle of April and is likely to turn up to a fresh go long signal.
In the weekly bar chart of VMW, below, we can see a mostly bullish setup. Prices are above the rising 40-week moving average line. Even with the expected upside price gap prices will not be too extended when compared to the average line. The weekly OBV line has been edging upward the past three months suggesting more aggressive buying and accumulation ahead of this rally.
The weekly MACD oscillator has been above the zero line since July of 2016 and is pointed up in a bullish configuration.
In this Point and Figure chart of VMW, below, we do not have the premarket trading plotted. A straight up line of "X's" with no price gap is what is probably going to happen. A potential price target of $179 is indicated.
Bottom line: If you are still long VMW hang on. I would raise sell stop protection to $142 which would be a new low on the Point and Figure chart.