Software Stock Chatter Is Growing Louder After a Top
We're taking a first step toward cleaning out the sellers.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
So, the chatter about the breakdowns in software stocks got a bit louder on Wednesday. Was it loud enough? Probably not, but it’s getting louder and that is a first step toward cleaning out the sellers.
The uptrend line I showed the other day did break and you can see the flatter blue line around 98 is still on the chart. I would expect, at least in the near term, (IGV) sees a bounce off the blue line which is also the same level where the spike low in November was.
But that is a top. I don’t want to sugar coat it.
As for the QQQs, the volume picked up quite a bit with just over 72 million shares traded. That is the highest volume since the mid December low, which tells me that folks finally got around to doing some actual selling. The uptrend line did not break; it came close though.
Yet the 493 held strong. Breadth was positive all day, even on-Nasdaq breadth was positive. And at least for the day, the number of stocks on Nasdaq did not expand.
There was a change that we must discuss though.
The penny stock trading that was so dominant back in the fall (September/October) has returned. Nasdaq’s volume was just over 12 billion shares and 3.5 billion of that was two penny stocks. I know it sounds odd to say on a day when the names everyone knows and loves were down so much, but the penny stock trading is to me yet another sign of giddiness.
Or, at least, I will say it is giddiness in that folks are more than willing to speculate in penny stocks. Maybe they don’t want to play (NVDA) anymore, but there is no hesitation on buying a stock that trades at a nickel.
The Investors Intelligence bulls lifted a bit and the bears contracted a bit more but it only took the Bull/Bear Ratio to 3.44 (up from 3.33 last week). In other words, we didn’t quite get a reading over 4.0 or even over 3.75. So, I’ll keep this indicator in the "complacent" camp and not move it to giddy.
I also noticed how, all of a sudden, folks started talking about the Utes again. I’ve drawn several lines on the chart. The lower line is what I have been using to have a positive view on the Utes. The flat line is the line I noted the other day, asking them to trade over 1080. And now we have the crossing of the downtrend line.
There are layers of resistance all the way up but at least we finally crossed that downtrend line. At least we finally got five straight green days which probably means we’re due a dip on Thursday in this group, but the improvement continues.
I expect the 493 to get overbought at the end of the week. And I continue to expect we will see a rise in volatility.
