Will Software Buyers Continue to Step Up? Let's Have a Chat
All this chitter-chatter of a software bottom has me raising an eyebrow. Also, looks at the semis, tech volume, Meta, Microsoft and cruise stocks.
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The Market
For our daily software update let me say that I think the market is going to give us another chance to see if the buyers step in the way they have the last few days. I was fairly confident they would two days ago and leaned that way Thursday. But now I’m a bit more iffy.
Why? Because after three straight up days there is far too much chatter about software bottoming.
My view is that we are more apt to get a lot of back and forth, up and down, and we will get jerked around. A lot. That is the way stocks grope for a bottom. They try and find the equilibrium of where buyers meet sellers.
I think we had panic selling on February 6, we rallied, came back down and had another round of panic selling. Now we are getting the standard shorts covering and some buying. Again, we should see the stocks sort themselves out over time. We can trade them for now.
As for the semis, I earmarked them as overbought about three weeks ago and they have mostly gone sideways. I consider Thursday’s action just more of that. The best news for tech stocks is that the QQQs traded over 90 million shares Thursday. That is the highest volume since November.
In terms of sentiment we saw the AAII folks rein in their horns with the bulls down to 33% and the bears up to nearly 40%. And we saw the NAAIM Exposure fall to 75. Both are finally showing some caution.
The bottom line is I’m not sure much changed Thursday indicator wise, nor has much changed all week. The S&P and Nasdaq are both flat on the week as are the indicators.
New Ideas
Let me reiterate that Meta (META) hasn’t done much and sure it has resistance all the way back up, but as long as it stays over $620 the chart is okay.
Today’s Indicator
The 21-day moving average of the ISE call/put ratio is now closing in on where it was in April of last year. The call buying has picked up moderately in the past two days so we’ll monitor that, but mostly the complacency has been wrung out.
Q&A/Reader’s Feedback
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Corning (GLW) hasn’t done anything wrong yet. It is over-extended but that’s the worst I can say about it. I’ll call it a hold as long as it holds that steep uptrend line. It can even break that line and still be okay but that would be a first warning.
We have looked at Microsoft (MSFT) several times in the last few weeks. Like all software stocks, it is trying to form a pattern. It is attempting to find buyers down here. If you want to trade it to the upside, I have no issue with that, but if you are looking for the chart to say "all clear" I can’t say yes, that’s what’s the chart says. Not yet.
Avis Budget Group (CAR) is oversold enough to rally but that’s the best I can say about it down here. If it rallies to $110 then I think I would sell some there. Otherwise, I’d be waiting for a pattern to shape up rather than guess that this was the low.
Wayfair (W) should rally back to that $85-90-ish area but that’s the best I can say now and I would be inclined to sell some there. If you are looking to buy it for more than a trade, wait for a pattern to shape up.
I find myself going back and forth on the cruise ships as they each have different charts. Norwegian Cruise Line (NCLH) has the most interesting chart to me because a move over $25 would be a mini breakout. The prior highs at $27 will be trouble but let’s see if it can get over $25 with any oomph as that would be a positive.
I struggle with Carnival Corp. (CCL) just because of that spike high at $34 being so recent, but if it can get over that level, this would be a nice breakout.
