Dead Weight:

We have been taking a look at the biggest influencers on the Nasdaq, in terms of weighting the last few weeks. MSFT and APPL look very good, GOOGL CLOSED above the very round 1300 number Thursday and Friday this week (all three of theses aforementioned names are trading right at all time highs). AMZN is on a 4 session losing streak, and below we round out the top 5 components looking at FB. It displayed some relative weakness this week falling 1.4%, and all 5 days CLOSED at or in the lower half of the weekly range, while the Nasdaq rose just more than 1%. It is backing off near the round 200 number like it did in late March, and it was able to spend a few weeks above the figure in July, before backing lower. AMZN and FB are both near correction territory, and each chart trades wide and loose, hallmark bearish traits. MSFT AAPL and GOOGL conversely all trade taut. The Nasdaq is on a current 6 week winning streak its third such of 2019, including the tech heavy index starting the year higher 10 in a row. It should have no problems shrugging off the woes of AMZN and FB, but if any of the other 3 begin to falter, then it would be time to get concerned.

Software Firming?

I have mentioned it before, and will do so once again. It is impressive how well the Nasdaq is holding up, despite the software sadness if you will. If this group can gets its act together, it could fill in as a possible leader while the semiconductors take a healthy breather. With some of the astonishing moves lower,  the IGV does still remain just 5% off most recent 52 week highs. With short memories investors quickly forget that the ETF began 2019 with a powerful 10 week winning streak, and rose 70 handles between January-August. With the top four components acting well, with MSFT ADBE ORCL and CRM less than 7% off their recent yearly peaks, it is not out of the realm of possibility the fund and group can gets its act together and give the technology arena a turbo charge. Let’s not forget the HACK that we spoke of recently has as of today CLOSED above the round 40 number and has advanced 12 of the last 13 sessions.

Recent Examples:

Software, like we mentioned, may be getting its groove back. Couple that with a resurgent European stock market and the chart below of SAP, and how the large cap software name appeared in our 10/25 Technology Note, could turn out to be a winner. We were WRONG about this name as we though good risk/reward would be offered on the short side with a move into a gap fill and a bearish engulfing candle. In fact now it looks like the scenario may be a potential cup base pivot of 140.71. The stock is on a current 5 week winning streak, and has not looked back since an impressive 9.4% weekly gain the week ending 10/11. The pause between July-October now looks like just a rest after a nice 18 of 28 week winning streak between weeks ending 12/28/18-7/5 (during that run 9 of the 10 down weeks fell 2% or less). It sits just 3% off most recent 52 week highs, and feels like there will be a magnetic pull into year end toward the possible entry through a 140.72 cup base pivot.