As I shared before, if the market is up, vmw most likely be as well. But interesting observations are:
1. nasdaq and s&p formed new high - vmw didn't
2. vmw finished today only 28c higher! on decreasing volume since feb 20
3. and again the market is oversold and reaching high on lower volume, regardless of bad news
4. big question is how low vmw will go when the market will be heading down
but as no one has the crystal ball - we are not going long at this point. We may miss vmw gaining another 1-2$ from here - nut it's too risky as far as we are concerned. But once again - we may be totally wrong in our market assessment and the market will keep going up with no real substance for a while, before it crushes...
I was wrong since the market went up on relatively low volume, although were many bad news. This usually happen when the market is at the end of wave 5 (for those of you who knows technical analysis) and before dropping down. But Look at the following facts and judge (once again, I only share here my opinions without trying to influence you to do anything;)
1. Nasdaq made new high, vmw didn't even reach previous high at 101.52
2. day after earning, when vmw hit the high at 96.68, nasdaq was low and hit the high of that day at 4091. Now the nasdaq hit the high of 4285 and vmw barely(probably due to options expiration day) crossed the strong resistance of 96.68 and closed down - 96.41.
3. yes if the market will be up, vmw will be up as well. but, if the nasdaq and dow will be testing their 50 days moving average which as a minimum we believe they will next week, vmw will do that as well (92). and if they test their lows down to 3968(nasdaq), vmw will be at 86 or much lower because it didn't made a high above 101.52 yesterday.
4. it took vmw 12 days! to go from 87 to 97. It took vmw 4 days to go that same route down.
5. bottom line, when the market is down vmw quickly follows. when the market is up, vmw slowly follows.
The nasdaq reached top resistance around 4280 (check around 2000). Dow is testing its long time trendline below - market will be down next week and vmw with it. I wouldn't hold profits over the weekend as the nasdaq will gap down. We expect vmw to get as low as 94 on Monday or Tuesday. So, today/yesterday we sold our long positions. Will pick up more around 92 next week.
vmw has tough resistance around 96.5, which didn't manage to pass in the past few 3 days, while the market managed to finish high each day. Market mow reached at least a short term high (if not last high for many months to come), as the economy is still weak. So, unless fed manages to list the markets again today and in next few days (although the market is greatly oversold), we believe market will be down in the next few weeks testing it's 50 days MA and probably the interim low (dow at 15,350). and on that front vmw will be testing its 94, 91.5 and 87 respectively), so we have taken profits and sold 50% of our holdings in the past 2 days and bought march 90 puts.
only problem is that vmw is a laggard in the market. Yesterday he market had a great jump and vmw didn't. Market is going down probably correct 38.2-68.1% of it's recent up trend. End of today Cisco is reporting and probably will push the market down. dow probably will be down to 15,700 by end of this week. and vmw will be down with it to probably 90-91. But of course we could be wrong...bottom line, vmw seems to follow the market down whenever it goes. it won't follow it up many times though. so we have been selling today around 94. will pick it up again around 90
it has resistance around 93 and the S&P has resistance around 1800. Both reached that levels today and we believe that they will trace around 50% of the bounce since 2/4. So tomorrow if it gaps up or down we are selling more and picking it up again around 89.25-90 where it is Fibonacci 50%-61.8% after that it will run probably to 96-98 range next week
no need to panic, it is testing the 50 MA from the top which is at 89.4 now. soon to break the top channel of 93.5, heading to 96.5
well few things to consider -
1. market have been oversold and S&P is 20-30 points from its 200 MA. Dow is testing it now
2. many funds are targeting to buy stocks when S&P is around 1700-1720
3. Read what Yardeni - one of the leading chief investors is saying - suggesting to buy stocks at these prices as emerging markets are not a real problem
4. VMW is being accumulated by investors. and it's near the 61.8% (86) from the top at 101.52 and the low in Nov 14 2013.
Based on the above we are buying now. stock won't get down at this point below 86 in our mind and has a much more opportunity to go up (already down 14% from the recent top at 101.52)
dow and nasdaq are bouncing back from critical levels. dow - moving average of 200. nasdaq low trending channel which was there since 2011, and vmw did build a good support around 88-88.5 a bit below the 50 days moving average which provides good support.
well - the 50 moving average which typically provides great support is at 88.70, very close by.
just broke the down channel it formed on 1/29 from the top it reached that day (96.68). It's heading there. and will cross it next week on the way to 100. Additionally, every time vmw have been flagged as laggard (yesterday) the stock used to reverse it's down trend), specifically if on the day it was defined as laggard the market was up (like yesterday).
and institutions are always buying near the 50 moving average which is at 88.74 and will be higher next week. so if the stock may hit this today or early next week it will strongly bounce back on its way to the 100 levels
it is testing it's 50 moving average. same as nasdaq and s&p did. it's building support and then next week if the market is up (typically in February it is - check history) - stock can reach 100. I am buying at these levels. Assuming the market won't crush (which I don't think it will - check the support the nasdaq and s&p built and bump higher today - stock will run as well.
stock could have crushed today after it was down yesterday and it didn't. so good support is being firmed.
My assumption is that Citrix (CTXS) which does compete as well, dragging VMW down since their missed on top line and low 2014 forecast. VMW exceed that and gave strong guidelines for 2014 - so, in my opinion VMW is forming a support before its will at least revisit 101.52 (2013 ended up at 89.71, so its is close by). and If you look at fibonacci retracement - upside mid target is 108.
market is reaching strong support. (check nasdaq, s&p and dow) and is oversold. vmw will finish today up, probably anywhere 96.5-97.7 if not higher. it will reach 105 by end of next week if not earlier.
only reason it's down is that crowd worried since operating margin reduced by 1-2%. Who cares - they have tons of cash in the bank, nicely growing, have the backup of EMC if and when need more money for acquisitions, made the right choices to keep their competitive advantages and increase their revenues.
So, yes - stock will be crossing 101 again soon and heading to 110.
nasdaq tested its 50 day moving average and bounced back. since 12/2012 every time it did that it reached a new high. Taking the fact that the nasdaq lost 200 in 3 days and bouncing back and it's down for the year, gives the right opportunity to resume the up trend. We believe VMW will test the interim top of 101.52 by end of next week.