Software Heavy:

When the best acting sub sector within technology is looking toppy, it would be wise to pay attention. The group has made the V shaped recovery on its own, and overall there were many doubters if the benchmarks themselves could do it. So let us give software credit in that regard. The top 3 components in the IGV today, CRM ADBE and MSFT, all recorded bearish engulfing candlesticks at critical areas on their charts. The IGV did the same, and the chart below shows a potential double top. It is impressive that the fund was able to shrug off a bearish engulfing candle on 5/12, which created a handle in its cup base, but another one Monday in such close proximity is worrisome in the short term. The primary trend higher is still well intact, but a prudent pullback may be upon us. ORCL was made slight lower highs since April, and today yet another top 10 component slipped in ATVI although it did fill in a gap. The markets have recorded a very robust gain off the March lows, and the ascent of the move has fatigued its quadriceps. Time for a little stretching, rest and relaxation. We will know soon enough if this nascent move higher has legs, pun intended.

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