#IBDPartner

We’ve been talking about the software sector now for a couple of months and blogged about it in December. Back then we wrote about how our MarketSmith scans found WDAY (165), TWLO (94), PAYC (133), NOW (186), CRM (147), ZEN (60), NTNX (44), and COUP (66) it was before the glitch (Dec 03) and yet every single name is significantly higher (the lowest still up 6% and the highest 39%) than it was on December 03 while the QQQ is 3% lower! Pretty amazing divergence. To sum it up: this sector remains hot and is currently the clear leader of momentum stocks.

And the set-ups continue — we posted CDNS last week on our stream and it’s already up 5% and looks great for continuation.

CRM leaving base and we are swing long — great chart.

NOW big gap on earnings — we missed this one but are stalking for another set-up after a few days base.

NTNX we talked about last week in our streams — love the way it’s holding above the 200sma. The only thing that makes us slightly cautious is how long it is taking to lift away while sector has already moved. Do they know something we don’t know?

SHOP 160 breakout from our newsletter continuation — great chart.

TEAM like this digestion near 100.

These hot stocks are not letting buyers in easily with few and shallow pullbacks. Keep them front and center of your watch-lists — from what we can tell, the run is not over yet. See you on streams. HCPG

We talked about the 200sma Weekly on the SPY as the last stand last weekend. Guess what? It held, perfectly. Now what? Well in every successful previous test in the last 14 years it held as a zone meaning that it was tested several times. However as we explained last week when successful, there were no continuation down candles on weekly meaning there was no follow through down on two consecutive candle on 200sma break. Maybe this time is different and we have a perfect algo-bottom on SPY 234? Or maybe not. We have 2/3 basket swing long SPY QQQ IWM and we will trail stop up and stay defensive.

As our readers know we are big fans of “tells”. In this business tells change constantly and quickly and you have to constantly look for new edges/hints; strategies based on patterns that give you a slight edge. Software stocks have acted as one of our tells now for the last few weeks — when market is weak but they are strong it gives us more confidence to go counter trend. And when they are weak but market is trying to rally we become more skeptical of the move and more apt to short the resistance than buy strength.

We’ll see how long they act as leaders but for now they are so keep them on your watch-list. If you are MarketSmith subscribers look through these three software groups: G3220 (up 22% YTD), G3582 (up also 22% YTD) and G3583 (up 19%).

Good example of this group acting like leaders is the pattern on TEAM — just incredible relative strength in current tape.

For those new traders who got hurt these last few months — learn from it. We got hit hard as rookies in the 2000-2002 bear market crash but did not get hurt in 2008-2009 and as stressful as this last rout has been, it has not hurt us either. Grab a binder, write down notes, print out charts, and constantly be reflexive. Getting hammered in your first bear market is acceptable. Next one is not.

See you on the streams. HCPG

#IBDPartner

Volatile market continued last week but heading into Thanksgiving we are hoping that smaller ranges form.  If market can start churning in the upper part of the larger  range (SPY 260-280)  instead of heavy breadth days down and up then individual stocks can start breaking out with more success.

SPY is broken for now but if we enter a churn zone then we should be able to get off more individual trades that are not whipsawed up and down with the tape.  What’s needed for that?  More confident traders in a less nervous tape.

We found 10 IBD stocks that have potential (and one bonus!):  we are including fundamental information in the MarketSmith charts below (top left box) for the CANSLIM crowd.

ADBE #25 IBD holding onto 50sma weekly – over 255 and it could go.  Tech leadership is currently in chaos — can ADBE step into the power vacuum?

CDW #26 IBD holding very well in this tape, surprisingly so considering it is technology related.   Over 92 and things get interesting.

CTRE IBD #29 long base on weekly under 20.  On daily below you can see a small flag that is looking poised to be broken — 20 big kahuna breakout.

Zoom out to weekly on CTRE — you can see 20 is huge.

CYBR IBD #6  sold off from 84 highs but held the 50sma — any climb back over 77 would be bullish.

EEFT #23 IBD held the 50sma on the pullback — much better relative strength than the indices.  Trade is against that low (108) for any swing.   Great chart.

EW held 50sma weekly and now basing under 158 — add to radar.   IBD #37

 

FIVE is IBD #2 – held the 20sma weekly and now has to get back to near 126 to get momentum trader eyes on it again.   Great looking chart.

GDOT is IBD #27 — held the 50sma weekly and now needs to base near 90 as you can see from daily chart below.

HZNP is IBD #18 and has killer chart — look at the 50sma bounce on Thursday and follow through on Friday.

KL is IBD #19 – gold stock so expect some tricky trading — what we like to do on gold stocks is rather than buy breakouts, to look for pullbacks.   KL held the 50sma weekly last week and daily now needs follow through.  If you want to swing long here then stop is against 50sma weekly (18).

PLNT is IBD #13 held the 50sma daily on Monday — any new base near highs now would be bullish.

There you go: our favorite stocks from the IBD 50 list.   As stated above — if market can calm down, even if it does not go back into bull trend, then individual stocks can start making their own successful moves for swing traders versus the market the last few months where often stocks are getting crushed together in heavy breadth days.   See you on the streams.