Unsuccessful Software Coup:
The leading software group has rebounded nicely after its first CLOSE below its 50 day SMA Monday, for the first time in 2019. The last 2 sessions have gained a combined 3.2%, albeit it has not fully recaptured Mondays blow of 3.8%. Similar to the general in the semiconductor space when XLNX retreated heavily after earnings, the leader in the software arena, TTD slumped 14.5% on 5/9, but to its credit added nearly 13% the last 2 days. Below is a name that is assuming best in breed COUP and how it was profiled in our 5/6 Technology Report. The round number theory came into play with the very round par figure, which acted as resistance between March-April, now looks like sturdy support. In Sun Tzu’s The Art Of War, he states “avoid what is strong”, and that could apply here for the shorts that made a valiant effort to break this name. The bears should look for better opportunities where the outcome may be more successful.
Semiconductor Tailwind Now?
In our last Technology Report 6 days ago we looked at the WEEKLY chart of INTC and how the precipitous drop was no surprise given the quick failure of a long cup base breakout. This name is still well into bear market mode down 23% from most recent 52 week highs, and has lost ground 14 of the last 17 sessions. As stocks give off signals near market tops this name could have indicated a bottom in the lofty decline. This Tuesday not only recorded a bullish harami, but it was also a doji which often has the ability to predict a weakening of the prevailing trend. Now I think there are better acting names to play on the long side in the semiconductors, but one has a good risk/reward entry to the long side with a stop below 44.70.
Technology is still easily the best performing major S&P sector YTD up nearly 22% so far and its nearest competitor is more than 3% away in the communication services group. One name that should be admired is the chart of ROKU below, and how it appeared in our 5/10 Technology Report. It carved out a long WEEKLY cup with handle pattern, that was also deep, but one has to respect that is is modestly higher this week by .7%, AFTER the prior week screamed up more than 27% (Nasdaq is LOWER by 1.2% this week thus far). It is holding the round 80 number firm too CLOSING above 4 of the last 5 session.