Seasons Greetings:
Market participants should always be looking for an edge to improve their performance. PRICE should be the ultimate arbiter as always, but if certain data can back a bullish thesis one can be more confident in their trade. Below is the seasonality chart for software via the IGV over the last 5 years. July has gone a perfect 5 for 5 advancing for the month since 2018 with an average gain of 4%. But perhaps more impressive is how August follows through to the tune of an average of 4.8%. I took a peak at the same factors for the top 3 holdings and for the last 5 July and August MSFT averaged gains of 4.9 and 5%, CRM 3.4 and 13.1%, and ADBE 4.4 and 6.2%. The August returns exceed the July moves with all three. Rounding out the top 5 INTU figures were up 7.4 and 6.8%, and ORCL was the outlier for August lower by .2%. There were mixed reactions with earnings this week within the group with NET up 47% this week on the back of Friday’s 23% scream. DDOG rose 11%, and HOOD looks like it may be finding comfort at the very round 10 number as it looks to shed single-digit status going forward. Expect software to have a strong August.