Medium term
Trade view / 09 June 2016 at 9:49 GMT

UPDATE: Taking juicy profits in VMware

Trader /
United States
Instrument: VMW:xnys
Price target:
Market price:

I recently wrote a view on buying shares in virtual visualisation and cloud company VMware (VMW:xnys). The stock has since worked nicely higher and reached my first upside price target. Through the lens of risk management it is appropriate to take at least partial profits at this juncture.

One of my base cases for the trade initially was a rally back to the longer-term horizontal support/resistance line. As a result of the rally over the past couple of weeks VMW stock has done just that and kissed horizontal resistance. While the stock can certainly continue rising from here, one of the technical analysis 101 mantras is that former support/resistance has a tendency to become new resistance/support. In that vein taking at least partial profits at this former big area of support (now possibly resistance) is simply good risk management.

VMware, Inc
Source: eSignal 

On the daily chart we note that shares of VMware have in the meantime pushed back above their red 200-day moving average and worked into the down-gap from last October. While this down-gap has still not fully filled (blue box) the rally in recent days has  been fairly steady and in the near-term reward to risk on the upside has worsened. I am taking full profits in this trade, well done to anyone who participated along with me on this one. 

VMware, Inc
Source: eSignal 

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more


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