Perhaps I making this relationship sound like a broken record, but it is important to know which or the major subsectors within technology is outperforming. It is a good display of where your capital should be better allocated. This week we look at the WEEKLY ratio chart, comparing the SMH and IGV, and the semiconductors avoided a triple top. The baton looks like it has been passed after a brutal downtrend for all of 2018. The last 3 weeks the SMH has outshined the IGV, with last week showing a big divergence with the SMH rising 2%, while the IGV FELL 2.2%. The prior 2 weeks ending 9/6 and 8/30 weighed heavily in the favor of semis too with the SMH producing back to back 4% plus gains, while the IGV rose an impotent 1.3 and 1.2%.
Software Name Continues to Buck Trend:
We brought attention to this chart last week, after the potential trend change following the bullish harami cross recorded on 9/4 while finding support at its 50 day SMA. It was a line it had been below for more than 4 months prior, and fast forward to today and the bullish action continues. The stock is approaching an area that has given it trouble since June near the 28 level, and a move through would be above an ascending triangle. A measured move to 38 would be in the cards, but it would probably encounter some difficulty near an upside gap fill from the 5/30 session first. Its 50 day SMA is beginning to flatline for the first time in months. Last weeks jump of nearly 13%, comes on the heels of the two week surge of more than 30% the weeks ending 8/23-30.
WEEKLY charts must be looked at, as they will give a clear picture of what the potential future direction may be. Below is a good example of the chart of SVMK and how it appeared in our 9/4 Technology Note. The long digestion after a cup with handle breakout was a good sign, and included a failed breakout above a cup base pivot of 18.58 the week ending 7/26 that rose 10.5%. The very round 20 figure pushed the stock back on 8/2, a day where it jumped 18%. It has since reset and on its daily chart has an add on above a double bottom trigger of 18.57 (remember leaders give you chances to add to your position on the way UP). Additionally a break above that 20 number would be a year long cup with handle breakout in a base started began one year ago, the week it came public.