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Technology Sector Review: 4/8/20
Who's Zooming Who? The classic song from Aretha Franklin was wonderful at foreshadowing. Released 35 years ago, it could be redone in 2020, as it correctly predicted what would be going on. Of course I am taking a stab at some humor here, but we have mentioned how the market would potentially begin accelerating higher once the stocks that were shrugging off the recent strong softness came back to life. That has occurred as of late with DOCU lower 4 of the last 5 sessions. TDOC is down nearly 10% this week, and EVBG by almost 7%. Below is the chart of ZM, and it too has had its recent bout of weakness. It has dropped 11.3% this week so far, and that is AFTER the prior week slipped 15.5%. Now I know what many are thinking, yes it has fallen precipitously because of the news regarding privacy and security concerns. But PRICE action is all that matters, and presently it is sitting on a very slippery slope in the 50 day SMA. The weight of the name being 31% off most recent 52 week highs suggest that support may be broken here, and a move to the very round par number could be in store.
Healthcare Sector Review: 4/7/20
Biotech Windfall? The healthcare group is for the most part viewed as a defensive group. The XLV does give one exposure to both mature healthcare names, as well as a sprinkling of "risk on" biotech plays. If one wanted a pure play, with a bit more volatility they could purchase the XBI. The space has benefitted, and garnered a bit more attention with the coronavirus, but give it credit for also hanging in there as an election looms just months down the road. The ratio chart below compares the XBI to the S&P 500, and the XBI is making another run at resistance. On its PRICE chart it is approaching the round 80 number, which was a gap fill from the 3/11 session. However this is the second time it is knocking on the gap fill door, and if the first time is not successful in knocking down the instrument, it it most likely going to proceed higher. The ETF still trades 18% off most recent 52 week highs, and its double bottom in the low-mid 60s with last month and late 2018 still holds up. Give credit where it is due until it is no longer warranted.
Technology Sector Review: 4/6/20
"Old Tech" Green Shoot: It has been hard to find many positives recently, but if one looks they shall find. I still think shorter term there is a need to be cautious, but longer term I think one can be building positions, it just depends on your time frame. Aspects I continue to like include the intraday ranges compressing. Additionally I can not tell you how many people I have spoken with this week that tell me they have an abundance of cash on the sideline waiting for "better opportunities". Once this money is deployed, it can possibly lead to a swift move higher in equity prices. A good way to find where to put the capital are in stocks that are shrugging off the weakness as of late. A good example may be INTC. This name does not garner the clout it once did in the past regarding the semiconductors, or the overall market for that matter, but it is quietly looking better. Intel ROSE this week to the tune of 3.4%, while the SMH fell by 2.6%. More aggressive buyers could enter here with a tight stop, but conservative investors should probably wait for a move above 56, as the potential of the right side of a cup base develops.