For his "Executive Decision" segment of Mad Money Tuesday night, Jim Cramer spoke with Sanjay Poonen, COO of VMware (VMW) . VMW is a cloud software provider that just posted a solid quarter that included 16% revenue growth.
Poonen explained that VMWare is helping to usher in the next generation of data centers. His company works closely with Amazon (AMZN) , the leader in the cloud space, and that partnership continues to go well.
VMW is also actively involved in the upcoming 5G wireless build out, providing telcos with cloud software to help their networks and customers transition to this next generation of wireless technology. This transition will take several years, Poonen said, and will be a huge opportunity for the company. All this sounds bullish but let's check out the charts too.
In this daily bar chart of VMW, below, we can see that prices have been in an uptrend the past 12 months. During the fourth quarter 2018 "meltdown" or mini-bear, VMW only declined slightly in October and then made a sharper dip in December before rallying back to new highs this year.
VMW is trading above the 50-day and 200-day moving average lines that both have positive (bullish) slopes. The volume histogram right below the price chart does not show any special features, in my opinion, but the On-Balance-Volume (OBV) line is very bullish.
The OBV line turned up very strongly in February and March to confirm the new price highs. A rising OBV line tells us that buyers are acting more aggressively than sellers.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in early February for an outright go long signal. The oscillator crossed to the downside earlier this month for a take profits sell signal but looks to be turning upwards yet again.
In this weekly bar chart of VMW, below, we can see that prices have more than tripled in the past three years - a portfolio keeper! VMW is trading above the rising 40-week moving average line.
The weekly OBV line has been positive the past few years and has strengthened to new highs this year.
The weekly MACD oscillator has been above the zero line for much of the last three years and has turned upwards to a fresh buy signal.
In this Point and Figure chart of VMW, below, we can see an upside price target of $193 being projected.
Bottom line strategy: The charts of VMW are bullish. Remain long looking for gains to $193 and maybe $200 in the next few weeks. Raise stop protection to a close below $164.