Attention Traders: When EMC Hits This Level, Sell

EMC Corp. (EMC) — One of the world’s largest suppliers of enterprise storage systems, EMC also owns 80% of VMware (VMW), an industry-leading provider of server virtualization software. On June 27, Wells Fargo Securities said it expects EMC to benefit from multiple factors, including “a strong portfolio of assets in key areas of future industry growth.”

ChangeWave Research’s Josh Levine estimates the total capacity for movement from enterprise storage to the public cloud will be more than 400% from 2011 to 2016, and he said EMC should accumulated under $26.

S&P reported that an anticipated rise in revenue driven by the increased adoption of cloud computing is the basis for its projected earnings increases. It estimates operating EPS of $1.92 in 2014 and $2.15 in 2015, with a “five-star strong buy” rating and 12-month price target of $32.

Since Dec. 20, EMC completed a break from a huge bullish saucer, and in February, flashed a golden cross. A major bull channel was formed resulting in a long-term bull market.

I last covered the stock on July 8, at $26.78, with a target of $32. Traders should continue to hold EMC for this target, but should sell at that price in anticipation of further profit-taking that could drive the stock down to the gap at $27 to $27.76, where it should again be bought.

Investors, however, should continue to hold EMC long term for participation in the expansion of the mobile cloud. This A-plus rated stock is an excellent long-term investment with a 1.6% yield, but it may be subject to greater volatility beyond $32.

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