VMware, Inc. (VMW) — VMW stock soared nearly 14% on April 20 after the company reported better-than-expected earnings and a share buyback program of up to $1.2 billion. The post-earnings pop did plenty of good through a technical lens, further improving the near-to-medium-term picture.
While today’s trade setup is more near-term oriented, we’ll start with the weekly chart to gain perspective. Here we see that on the steep drop in October 2015, VMW stock sliced through a horizontal support line that had been in place since 2010.
As shares bottomed in February, the MACD momentum oscillator reached oversold readings not seen in a very long time. The reflex rally that followed got a good boost last week. VMW stock is now gravitating toward its former support line, which could act as resistance.
Moving on to the daily chart below, the post-earnings rally came in the form of an up-gap-and-go rally. This broke VWM stock out of a tight, multiweek trading range and decisively above its 100-day simple moving average (blue line).
From a purely momentum perspective, shares are clearly overbought at this juncture, but chart chasers and momentum traders could still push them higher.
Following last week’s rally, VMW stock has consolidated in a tight range again. A break above $59 and change could get shares moving toward the next upside target in the high $62 area, which would match December’s highs and coincide with the 200-day moving average (red line). If momentum is sustained, the bigger price target looms near $68.
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