EarningsBeats.com Digest for September 27, 2019
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Dear EarningsBeats Digest Members.
Just a reminder that Tom Bowley's "Trading Places Live" will begin next Wednesday from 9-9:30 am eastern. The show - exclusive available to EarningsBeats.com community members like you - will then run every Monday and Wednesday at the same time and will include a briefing on market activity before the opening bell. Discussions will include various topics such as earnings reports, industry group charts, sectors, big picture considerations, etc. We'll make sure everyone has Zoom room instructions
prior to the start of the show.
At your service,
John Hopkins
EarningsBeats.com
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Waiting For The Bounce
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Let's face it, software stocks ($DJUSSW) have been crushed. After reaching an index high of 2880.38 on July 29th, they tumbled over the next week, hitting a low of 2617.76 on August 5th. That low has held, which is good, but the S&P 500 returned to nearly test its all-time high close set on July 26th, but the DJUSSW has not come close to returning to its high. Instead, its best rally attempt failed at 2791, a full 3% below its July 29th high. Clearly, relative
strength has turned to relative weakness. Microsoft (MSFT) has managed to perform relatively well, masking the enormous carnage seen in many software names. Huge outperformers during most of 2019 like Shopify (SHOP), Alteryx (AYX), Trade Desk (TTD), and Okta (OKTA) have dropped the most and have done so on heavy volume. Those four have fallen over 20% in just the past month. Growth stocks have been clobbered and the best ones have really been beaten up.
However, perhaps the absolute best software stock has been Digital Turbine (APPS). It's down roughly 8% over the past month, but is higher by 265% year-to-date. Furthermore, APPS doesn't appear to have attracted the massive downside volume that others have. The uptrend and relative strength remains, along with solid volume trends. Here's the current technical picture:
Obviously there are no guarantees in the stock market, but it doesn't seem as though Wall Street has trashed APPS the way it has others in the group. Personally, these are leaders and I expect them to rebound into earnings season, but APPS could remain the best of the bunch.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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