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| PRIME STOCK NEWSLETTER FOR February 19th, 2010 |
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Position
Statement: In our Prime Recommendation Letter we attempt to identify the recommendation with the highest probability of moving higher. We recommend that stop orders be placed at the time of purchase, and once the position has moved profitable we recommend a stop be placed a minimum of $0.375 above the purchase price and moved higher as the position moves higher. |
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Today's Comments: The overall market moved moderately higher again on Thursday in a broad based move that saw the majority of the sector indices I track move higher on the day. The strongest sectors where the Gold/Silver, Networking, Commodities, Disk Drive Manufacturers, Cyclicals, Oil Services, Computers, Insurance, Retailers, Oil & Gas, Consumer, and Chemicals. The Transports were lower on the day. There was weakness in bonds as interest rates moved higher on the day. It should be noted that the yield on the 30 Year Treasury closed at 4.752%, it's highest close since the financial crisis began in the summer of 2008 when the 30 Year Treasury Yield closed at 4.802% on June 13th. It looks to me that we could see the yield on the 30 Year Treasuries push back into the 5% range.
It should also be noted that after the close of trading yesterday the Federal Reserve raised the interest rate known as the Fed Discount Rate to 0.75%. Additionally the Fed has stated that it will end its program to buy mortgage scurrilities in March.
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Recommendation: Buy
VMware, Inc. 'VMW' |
| Company: VMware, Inc. |
Symbol: 'VMW' |
Closing
Price: $48.26 |
Web: www.vmware.com |
YH: $48.95 YL: $19.16 |
EPS: $0.49 P/E: 98 |
Shares
Outstanding: 403 Million |
Forecasted
EPS: $1.18 |
Market Cap.: $19 Billion |
| Dividend: N/A |
Yield: N/A |
Aver.
Daily Trading Volume: 1.7 Million Shares |
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| Price Targets: $52.69 and then $53.32 |
Downside Stop: $47.03/share |
| Options Rec.: March 45 Calls @ $4.30/contract |
Options
Symbol: VMW C 45 |
Additional information on Vmware, Inc. 'VMW' can be found (here)
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Company Description: VMware, Inc. provides virtualization solutions. Its virtualization platform products include Player that enables individuals to run virtual machines on their desktops; Fusion, a desktop virtualization product for users of Intel-based Apple Macintosh computers; Workstation for software developers and enterprise IT professionals; Server, which enables virtual partitioning of a server; ESX Server, an enterprise-class virtualization platform that runs directly on the hardware; Virtual SMP that enables a virtual machine to use four physical processors simultaneously; and VMFS, which allows multiple ESX Servers to share block-based storage. The company also offers VirtualCenter that provides a central point of control to manage a virtualized IT environment; VMotion, which allows users to move virtual machines; DRS that creates resource pools from physical servers; HA, which provides automated recovery from hardware failure; Consolidated Backup that enables LAN-free automated backup of virtual machines; Storage VMotion, which allows live migration of virtual machine disks; Update Manager that automates patch and update management; Capacity Planner, which enables VMware service providers to perform capacity assessments onsite; Converter to convert local and remote physical machines into virtual machines; Lab Manager to automate the setup, capture, storage, and sharing of multi-machine software configurations; ACE that allows desktop administrators to protect company resources against the risks presented by unmanaged desktops; Virtual Desktop Infrastructure to host individual desktops inside virtual machines running on centralized servers; Virtual Desktop Manager, a desktop management server that connects users to virtual desktops in the data center; and VMware Lifecycle Manager that provides control over the virtual environment. The company was founded in 1998 and is headquartered in Palo Alto, California. VMware, Inc. is a subsidiary of EMC Corporation.
Chart updates daily |
A full list of the news headlines for VMware, Inc. 'VMW' can be found (here) |
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Our Analysis: The shares of VMware, Inc. 'VMW' set a new yearly closing high yesterday. In the process they completed the handle portion of a "cup and handle" pattern. This is a bullish trading signal. The cup portion which was completed in mid-January provides for a measured move to our lower price target of $52.69/share. If the shares of 'VMW' close above that price level, then they should continue to move higher and test $53.32/share, the measured move from the handle portion of the pattern. I see downside support on the shares of 'VMW' @ $47.45/share, and have set my stops accordingly at $47.03/share.
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Stocks
Looking Higher |
PG, STX, HD, GNW, LUV, SLE, ALTR, XLNX, CELG, APC, CY, CTXS, RTN, CAG, GD, HNZ, CREE, ALTS, RVBD, ASH, HSIC, CBE, ALXN, BLL, KAMN, MSFT, CSCO, CS, KR, BA, BHI, MTG, PLCM |
Stocks Looking Lower |
VLO, LL |
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| Yesterday's Edition of the Prime Stock Newsletter |
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