Nasdaq Line In The Sand:

The Dow may be what many around the water cooler at work discuss, the S&P 500 is the benchmark most managers are judged against, but it is the Nasdaq that really determines the appetite risk of investors. When it leads, it tends to carry the other indexes on its back, and is why the majority of ones focus should be devoted to it. The tech rich average is at a make or break level right here. It came within 25 handles of the 7000 figure Wednesday-Friday, which also happens to be downward sloping 50 day SMA resistance. Add to that it is retesting a bearish descending triangle breakdown from mid December and this week was accompanied by bearish candlesticks. It is a tall order, and the next few weeks should give some clarity, but if the Nasdaq were to break through this area convincingly, the downtrend would be much harder to justify. Buckle your seatbelts.

Software Acting Anything But:

One must continue to search for names in the software arena, over the semiconductors (if one leans toward buying strength, as one should). IGV trades 12% off most recent 52 week highs, while SMH still trades in bear market mode lower by 20%. Among software there are many more names in solid uptrends with examples like TEAM TWLO and WDAY just 3% off recent all time highs, where among semiconductors one would be hard pressed to identify stocks less than 10% off their own. One however does have to be impressed with the price reaction by laggard SWKS, whose reaction after lowering guidance after the close last Tuesday was respectable.

PLAB One Keep Watching:

Some semiconductors still warrant a look from growth investors, and one can insert XLNX and AVGO into that conversation. Below is the chart of another “old tech” name, PLAB and how we profiled the name in our 1/4 Technology Report. It rose 8.3% this week in double average weekly volume, and Monday it broke above the 9.75 suggested entry. Next up for this stock is a collision course for the add on entry above an 11.10 trigger in a nearly 5 month long pattern.

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