VMW Technical Support and Trade Setup

by Andrew Nyquist on January 20, 2013

vmw technical support analysisBy Andrew Nyquist
On Friday, I initiated a one third sized trading position in VMware Inc (VMW). To be clear, this is a short-term trade  (entry 1 of 3) with defined risk. The risks are clear with overbought market conditions and a lagging technology sector. That said, I initiated the trade due to price proximity to VMW technical support.

Here is a breakdown of the trade with VMW technical support levels:

1. The stock price action has produced lower highs and higher lows for the past 3 months. This coiling action means that a larger breakout or breakdown is coming

2. The near-term trend is up.

3. Strong VMW technical support resides between $92-$94. This area consists of a technical backtest, near term uptrend line, and 50 day moving average. $93 is also the 50% fibonacci retracement of the September high to October low. I plan to purchase another 2/3 position closer to $93 and preferably with a $92 handle (setting a mental stop just below). An expanded risk profile lens allows for VMW technical support down to $91, so I may adjust stop level depending on the price action.

Targets to the upside would include $96, $98, then a retest of the September highs ($100-$103). Since I viewing this with a short-term lens, I’m setting my sights on $96-$98.

Trade safe, trade disciplined.

VMware (VMW) Chart:

VMW technical support

VMware (VMW) stock chart with trend lines and technical analysis. A closer look at VMW technical support and resistance levels.

 

Twitter:  @andrewnyquist and @seeitmarket     Facebook:  See It Market

Position in VMW at the time of publication.

  • TheTruth

    Technicals are B/S. No one could have seen this drop coming from a “technical perspective”. If they had positive news going forward it would have gone up. With stocks It’s all about forward outlook and the most drastic moves are almost always around earnings season. It’s easy to play the hindsight game.

    • http://www.seeitmarket.com/ Andrew Nyquist

      Thanks for the comment, but respectfully disagree on the TA. I’m not big on trading earnings either; this was a very short-term trade targeting 96-98. My target was hit and the trade was quite successful. My moves were posted in my twitter stream @andrewnyquist and mirrored the setup above. Take care – good luck.

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