It's Not Just the Software Stocks That Are Falling
Software stocks have gotten all of the attention, but there is weakness in other areas, too.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
I see after the bell on Tuesday that Robinhood (HOOD) missed earnings. I am not here to discuss the merits of their earnings, though. I am here to point out that their chart looks very similar to all those software stock charts.
I saw someone say the other day that they weren’t sure why Shopify (SHOP) was being treated as a software stock because it was more closely related to retail. I will leave that to the fundamentalists, but let me report that SHOP, too has a chart that looks like software.
This got me thinking about Sandisk (SNDK) which has gone parabolic in the fourth quarter. It has not rebounded in the last few days. In fact, it closed down seven percent on Tuesday, and I did not see a soul mention it. I grant you it needed a correction, but the stock is down over 150 bucks since the calendar turned to February. I’m not very good at math, but isn’t that more than twenty percent? That is one heckuva decline for no one to mention! Are the Robinhooders stepping away from these types of highfliers, not just software?
Western Digital (WDC) was down eight percent on Tuesday. Again, that’s quite a move to get no mention. Now it’s only down about ten percent this month and it did rebound for a few days, but this fourth-quarter favorite hasn’t gone anywhere in weeks now.
I guess what I am speculating is that the dive in software stocks has taken its toll on the rest of technology and no one seems to be chatting about it. Consider that in the last month we’ve seen the fever in the precious metals break and software crumble. Sure, it’s impressive that the S&P is still up here, but I can’t help but think of that chart I have shown you several times now, of the S&P relative to Nasdaq. There is some leakage outside of just software stocks.
Now in the short term I did say that if we pulled back early this week, I thought we’d see another rally later in the week and I am going to stick with that view because as you can see Nasdaq is not yet overbought.
In the meantime, we finally saw the Utes lift up out of that range they have been sitting in for some time now. They are into some resistance but that 1130 level is what I am focused on. I think that will be tough to get through the first time up there.
I continue to see this as a market of stocks and not one group of mega cap stocks pushing the indexes around. It’s not my type of statistic but I’d bet by now those seven or ten stocks are no longer 40% of the S&P. My guess is they have backed off a fraction or two, allowing the others to rally.
