EMC (EMC: sentiment, chart, options) and VMware (VMW: sentiment, chart, options) both found themselves in the crosshairs of negative brokerage news this morning. Both firms were downgraded - VMW to "neutral" from "buy" at Merrill Lynch, and EMC to "market perform" from "moderate outperform" by First Global. Both stocks have fallen in response to these moves, with EMC nearly 3% lower and VMW more than 5% lower, respectively.

While both stocks currently enjoy support from their 10-day moving averages (which have both bullishly crossed their 20-day counterparts - a bullish technical indicator), each is positioned below significant weekly moving averages. EMC faces resistance from its 10-week moving average, which it hasn't topped since the end of August. VMW's hurdle comes in the form of its 20-week trendline, which it hasn't closed a week atop since June.

Although both stocks have turned in miserable (to be kind) year-to-date performance, options traders maintain a bullish outlook on both firms. EMC's Schaeffer's put/call open interest ratio (SOIR) of 0.36 is a percentage point shy of an annual low, and VMW's SOIR ranks in the sixth percentile. This optimism could unwind at a moment's notice and push the stock lower. VMW does not have the downgrade potential that EMC has, though. Of the 20 analysts following EMC, 12 rate it a "strong buy" and 4 rate it a "buy." If any of these bulls follow First Global's lead, EMC could fall sharply. VMW could benefit from its ratings configuration, as 16 of the 19 analysts tracking the firm rate it a "hold" or worse.