Looking at AVGO's weekly chart, it has a trend line

Posted on: January 19, 2020 at 15:49:07 CT

...along the bottoms not far below the current price. That looks very positive. The daily chart has some consolidation just above the current price, so the price could go sideways or down in the short term. If you have a long time frame, and you are in the stock already, I personally would stay put, at least until the up trend is broken. If I were looking to enter a position, however, I'd probably wait to see if price has found support at the 50 day exponential moving average. It barely crossed it, but the price action is common for a reversal. In other words, the price action showed indecision. It started in one place, sellers drove the price down, then buyers drove the price up to the very same place it started the day. So, will Monday go up or down from there? Who knows? But if it goes up, that should mean that the 50 day average may become some support underneath. Along with the trend line adding support below, I'd be optimistic that the trend upward will continue. The indicators I use, the MFI, the MACD, and the Accumulation/Distribution line all appear to have bottomed and turned positive. I may start watching this for an entry. Thanks. Nice dividend, too, BTW.

VMW, on the other hand, is scary to me. The long term chart could be forming a head and shoulders pattern reversal, which would be very bad if it completes. An up trend has been broken on the weekly chart. The shorter term chart also looks unfavorable to me at this point. The price is below the 50 day exponential moving average, so I wouldn't consider entering a position unless it clears above it. Also, there is a descending trend line above it. Again, I wouldn't enter a position until it is broken.

All that said, I could be totally wrong. Looking at charts/price action is a read on current market forces between buyers and sellers. I think it is surprising how often things follow the "rules." For example, often there is support / resistance at numbers like 100, 200, 300, etc. Notice on the AVGO, that the price cleared 300, then dropped below it, only to find resistance three times at 300, clear it, and then dropped back down and found support at 300. However, changes at a company can occur that totally change the market's view of a company. Patterns get broken. It is a way of playing the odds that I find very helpful. Technical analysis is analysis of market psychology, which repeats. But news about company fundamentals can break charts, and in the long term, how well the company does is determined by how successful it is. The two are connected, ultimately, but can be disconnected in the short to mid-term.