Stock Chart Analysis VMW

Posted by downtowntrader | 11/12/2007 09:45:00 PM | 5 comments »

Stock Chart Analysis VMW

VMware, Inc. (Public, NYSE:VMW)

The Case for VMW

VMW has been hit hard the past few days and while it rarely pays to catch a falling knife, there's nothing wrong with picking it up off the floor after it's been dropped. I won't wax poetic about their product in this post, although being in the IT industry, I see everyday how they are dominating their niche market. What I will talk about are some technicals and possible market psychology trends that could influence VMW.

VMW has been one of the best performers this year opening well above it's $29 IPO price and closing at $51. It then moved in a very steady trend peaking at $125.25 just 56 sessions later. It has had a very steep pullback dropping almost 50 points in just 7 sessions. It has pulled back into it's 50% Fibonacci retrace and prior consolidation area. While it's still in a freefall, this is an area that "should" hold if all is well with the company. And while it may not bounce up in a straight line, it makes sense to start watching it, because there are a few seasonal trends that may influence them. First, a lot of traders missed VMW, and have been waiting for a pullback to get in, and this is the first time VMW has made the trip to it's 50 day sma.

Second, we are starting to approach a seasonally bullish period for stocks and then there is the year end window dressing period. Window dressing is when fund managers pick up the hot stocks of the year late in the year so they can report them as holdings in their annual reports, while simultaneously dumping laggards they prefer to not brag about. I can't think of too many stocks that would be more attractive for this type of trend then VMW. So again, it's probably early, but I would be shocked if VMW wasn't back over $100 by the end of the year.

Good Trading,


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  1. Anonymous // 11:20 PM  

    One of the reason stock is not doing very good is because of the competition VMWare is facing from Oracle and Microsoft. It is no longer the sole leader in the field of virtualization.

  2. Anonymous // 11:51 PM  

    microsoft is still at least one year away. I don't know about Oracle. Although VMW is clearly the leader, the price has nothing to do with this. Institution buyers are taking the profit.

  3. Anonymous // 9:02 AM  

    I am so tired of the bloggers. If you were at all part of IT you would not be making wild statements concerning "competitors." Simply put....there are no competitors right now. Microsoft loves one thing...Microsoft. Their virtualization tools support only their products. Also, there are way behind the power curve. just another tech giant finally getting into the ring. They have no proven products. Give us all a break. It seems that all a well known company need to say is "We have virtualization tools in development" and VMWare suddenly is bullied in NASDAQ. OK...Here is a simple riddle for all you non-IT folks.
    Question: What makes Microsoft so popular? Answer: Longevity. Question: What make VMware so popular? Answer: Longevity

    VMware is not going away

  4. downtowntrader // 9:59 AM  

    I'm in the VMW is not going away camp as well. They are established in the marketplace just like Microsoft is established in the PC OS space. Major corporations have already made a sizable investment in VMW's product, and they will be reluctant to move to a new product regardless of who develops it. On the contrary, they may stay away from Microsoft because of the name and holes in all their products. Any pullbacks on competitor "rumors" will surely be temporary.

  5. Anonymous // 3:17 PM  

    The "going green" trend with big business can be supported with VMWare and virtualization. Buy and hold.