EarningsBeats.com Digest

Published: Mon, 05/11/20

EarningsBeats.com Digest for May 11, 2020

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Is There A New Leader Emerging in the Software Industry?

Software ($DJUSSW) has been one of the strongest industry groups for several years now and its relative strength has not let up during the COVID-19 crisis. But we have seen rotation of strength within software. After a recent better-than-expected earnings report, 2U, Inc. (TWOU) has surged higher and cleared overhead resistance. Check out this chart:

The two black arrows under price lows in July 2019 and March 2020 form a double bottom. It's typically a bullish technical development when the high in between those lows (also March 2020) is cleared. That occurred on Friday. The PPO is showing excellent strength and momentum and all of the panels at the bottom of the chart are showing strength or relative strength as well. If the overall market weakens, there could be a few different spots to enter, but the initial level of support would be the breakout just below 29. I've drawn a red-dotted horizontal line marking key relative resistance. If TWOU can clear that relative level of resistance, I would expect much further strength here.

Happy trading!

Tom Bowley

Chief Market Strategist

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