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VMware’s Volatility and Relative Strength Index after Fiscal 3Q18

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VMware’s RSI

Earlier in this series, we looked at VMware’s (VMW) select technical indicators. Let’s look now at its RSI (relative strength index). Its 14-day RSI is 79, indicating that VMW stock is currently in an overbought territory.

An RSI figure higher than 70 indicates that the stock has been overbought and may fall soon, while an RSI figure below 30 suggests that a stock has been oversold and might pick up in the near future.

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VMware’s ATR and volatility

VMware’s ATR (average true range) value is ~2.0. In technical analysis, ATR is a moving average that’s employed to assess the volatility of a stock. So it’s helpful in the alignment of investors’ and traders’ investment choices in accordance with their risk profiles.

VMware stock has a beta of ~0.67. Beta is a measure of a stock’s volatility and is often used as an indicator of market risk. A beta less than 1.0 indicates that the stock has less volatility than the overall market. So VMware stock is relatively less volatile than the overall market.

Investors seeking exposure to the technology sector could consider investing in the SPDR S&P 500 ETF (SPY) (SPX), which has an 8.7% exposure to the application software space.

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