“Searching” For Answers, Pun Intended:
The adage goes, PRICE has memory. And when it approaches a level where it has been previously, it may become somewhat apprehensive. The more times the area is come into contact however, that anxiety most likely diminishes. Below is the chart of GOOGL, the fourth largest component in the Nasdaq and therefore having large implications on the tech rich benchmark. For the third time since the summer of ’18, it is honing in on the round 1300 number (interestingly it has received support at the very round 1000 number in that same time frame). It has work to do as the last time it touched 1300 it registered a bearish engulfing candle the week ending 5/3. But if this 1300 area can be cleared to the upside, it could join tech giants AAPL and MSFT, which have been acting very well technically (and AMZN cleared its 200 day SMA Monday). That could provide a thrust to the upside into year end and beyond possibly. On an overall technology thesis, just think how well it has held up in the midst of a software selloff. In my opinion that is just more ammunition in the bulls holster, IF the space can get going.
Return Of The Hack:
No one is denying the importance of software security, but the group was not always at the top of investors watchlist. HACK sits just 6% off most recent 52 week highs, and its lukewarm troubles began after it failed to break above a 3 week tight pattern the weeks ending between 7/12-26, with a 3 CLOSING within just .25 of each other. Give credit for the ETF hanging in there despite CSCO, the 2nd largest component, trading 19% off its yearly peak. VRSN another old tech play did complete its measured move to 180, after a bear flag breakdown below the very round 200 number on 9/10. But to accentuate the positive, nice earnings reports recently from FTNT last Friday, and PANW jumping 10% the last 2 weeks, the sub sector is back in vogue. Even FEYE is on a robust 4 week winning streak, and we were WRONG about that move. Perhaps it is unfair to make the comparison to IGV on the ratio chart below, with established names like TWLO and WDAY on their backs off 39 and 27% from their most recent ascents, but that does not mean one can not compliment the move of HACK.
Technology has been a stout actor all throughout 2019, and is looking to go wire to wire among the 11 major groups. It remains in the top spot with the XLK in comfortable control with a 10% point lead (higher by more than 38% thus far YTD ahead of second best sector the XLRE). Below is a beneficiary of the tech tailwind, and the chart of LITE and how it appeared in our 11/1 Technology Note. Last week it broke above a long WEEKLY symmetrical triangle rising 15.6%, its best weekly gain in 18 months, in the 5th strongest weekly volume in all of 2019. The longer the base the greater the space upon the breakout, so this name could potentially have plenty of room to run higher. The telecommunication equipment space has been a strong one with VIAV breaking above a bull flag last week, and look for the earnings reaction tomorrow of PLT which sports a bullish inverse head and shoulders formation with a neckline that coincides with the round 40 number.