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TheStreet Open House

5 Trades to Take as Stocks Soar in May

Stocks in this article: CAGLUXMFGRUKVMW

VMWare

One stock that's showing traders a more conventional bottoming pattern is VMWare ( VMW). Shares of the IT virtualization firm have gotten absolutely shellacked in 2013, tumbling more than 18% during a time when the broad market has been rallying extremely hard. But shareholders could be in for a reprieve if the double-bottom in VMW triggers.

>>4 Tech Stocks to Trade (or Not)

A double bottom is just what it sounds like -- it's formed by two swing lows that bottom out at approximately the same level. The buy signal comes when shares are able to break out above the peak that separates the two bottoms. For VMW, that peak is a bit higher than standard at $85, but it's a price that's at least within grabbing distance right now. I'd recommend picking up shares if they can print above that level.

One big component of VMW's decline in 2013 was a major gap down after a poor outlook from management at the end of January. With that gap still left unfilled, VMW could move quickly once $85 gets taken out. While that level is still a good bit away, it's worth keeping a close eye on this stock.

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