Software Reset?:

The discrepancy between the software and leading semiconductor spaces still exists even with the huge rallies on both Tuesday. Software via the IGV still trades 10% off highs made just one month ago, while the SMH is basically right at all-time highs. SMH bulls have defended the very round 300 figure very well with a gain of 4.9% today after Monday CLOSED exactly at the 300 number after a 10 handle intraday reversal. The question is do you stick with the leading semiconductors, or go with the “perceived” on sale software. For me, leaders act well for a reason, and they deserve your capital. Perhaps one can use a “barbell” approach to buying best-of-breed semis and sold-off software names (ASAN UPST). For me again I would buy generals in both, at good technical locations. Sure things are stretched at the moment after the first 2 days of this week, but make a watch list and be ready to pounce on good risk/reward situations. For anyone to declare they have not been somewhat baffled by the market’s action the last 48 hours is either lying or inexperienced. I was bearish this weekend, but one needs to be able to adapt to the current environment.

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