VMware Inc. (VMW) has been showing investors and market watchers independent strength since early November. When many stocks were feeling selling hitting them full force, VMW briefly broke its rising 200-day moving average line but then quickly came back to trade at new highs in recent days. Impressive. Let's check out the charts and indicators to see what more may be instore on the upside.
In this daily bar chart of VMW, below, we can see a bullish alignment of our go-to indicators. Prices have been in an uptrend since February when the 200-day moving average line was successfully tested. Prices encountered some selling resistance in July and September in the $160-$165 area and then retreated temporarily in October. The daily On-Balance-Volume (OBV) line shows an uptrend from last December to the end of June followed by a slow decline to late October. It looks like a new rising trend was started at the end of October and now the OBV line is not far from making a new high for the move up which would confirm the price gains. The trend-following Moving Average Convergence Divergence (MACD) oscillator moved back above the zero line for an outright go long signal by the middle of November.
In this weekly bar chart of VMW, below, we can see that prices are up more than three-fold from their early 2016 nadir. The rising 40-week moving average line was one simple indicator that worked extremely well the past three years. The 40-week average line is still pointed up. The weekly OBV line has been in a bull trend the past three years and like the daily line it too is close to a new high. The weekly MACD oscillator has been above the zero line since the middle of 2016 and just turned up to a fresh outright go long signal.
In this longer-term weekly Point and Figure chart of VMW, below, we can see the recent new high and a possible price target of $213.
Bottom line strategy: traders and investors should approach VMW from the long side. Buy a dip if available into the $160-$155 area but I suspect that may not happen so you can also buy strength above $170. Risk a close below $149 looking for gains to $200 and then the $215 area in the first quarter of 2019.