Mister Softee Acting Anything But:
Quietly Microsoft has become the biggest component in the Nasdaq, so perhaps we should pay more attention to this “old tech” software name. Of course it hails from the top performing software sector, although semis are making a run at them as we discuss later. Currently it trades just 4% from most recent all time highs, while AAPL still languishes 26% off its own ascent. Give the Nasdaq credit for outshining the Dow and S&P 500, up 13.4% YTD (although that trails the Russell 2000 up nearly 18% in ’19 so far). Furthermore it is acting well even as the big dogs GOOGL, AMZN and MSFT, AAPL are higher by just 7, 9, 9 and 10% trailing the Nasdaq’s YTD advance. Bulls can declare confidence, as if they can get going that will act as a nice tailwind for the rest of the year.
Chip Green Shoots?
The semiconductors have been playing second fiddle to the software space for some time, but it may be ready to stand on its own two feet and shine. One must realize both of these groups have been doing a ton of the heavy lifting for technology overall, and software still looks very firm (TTD today is a great example). On a relative basis it looks to be acting a bit better than software recently. AMD is higher by 32% YTD, XLNX strength continues to impress, and INTC’s 8 month cup base is looking better with every passing week. Lets these two critical sectors try to outdo one another, as it is good for the overall market.
As the market rally rolls along, tells can be seen by stocks that fail to show any vigor. The chart of SONO below and how it appeared in our 2/12 Technology Report could be a good example. A downtrend started nearly immediately after coming public last August. Surely it was ill timed as the market debacle of late last year was about to begin, but its failure to rebound at all was alarming. The stock trades 53% off most recent highs, and poor relative strength was witnessed this week falling almost 3% as the Nasdaq recorded its NINTH straight advance rising .7%.