Software Wobbling:

Is the software space on the ropes? We will only find out in hindsight, but some of the recent earnings reactions have been very swift to the downside. DDOG fell 17% on 8/8, SDGR by 24% on 8/3, and UPST by 34% on 8/9, and these are just a few examples. Give credit to those that actually acted well after reporting like a TOST that jumped 15% on 8/9. Getting an overall look at the space with the chart of the IGV and it looks tenuous. Yes on 8/8 it recorded a doji candle which is often a sign of an impending change in the current direction, but Thursday marked the third consecutive CLOSE below the 50-day SMA. The last 2 times that occurred in March and May witnessed rapid moves of more than 10 and 20% respectively. The fact that it is lingering this time may suggest that further downside may be warranted before this ETF is ready for the arduous climb back higher. Top holding ADBE looks firm compared to peers although it did register a small bearish island reversal on 8/2 and I still think ORCL (2nd largest component) is attractive on a gap fill just a couple of percent from here from the 6/9 session. These 2 names need to hold their ground.

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