Bear Flags Flying:

Hear that hsssssssss noise? That’s the air coming out of the tech balloon. We have talked at length about weakness in the semis, but below we will take a look at software. It is holding up “better” than the semis as seen on the ratio chart, but remember that is just showing a relative comparison, and on an absolute basis both can get hit hard. Over the last month period a number of former leaders have dropped more than 20%, most accompanied by a soft earnings reaction. They include TTD SHOP EVBG U FTNT and AYX. Below is the chart of the IGV, taking a look at the software space as a whole, and the trend continues to “soften”. One could even interpret the chart as a bearish head and shoulders pattern. ADBE is looking like a rounded top and ORCL which did fill the recent gap from the session looks like it may be out of gas already. CRM is getting too comfortable below its 50-day SMA, and those top 3 holdings in the ETF represent almost 1/3 of the fund. No rush to make fresh buys until the technical picture warrants one. 

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