Software (IGV): The software benchmark bounced ~2.8%, regained its 200-DMA and is attempting to recover from a sharp
correction in July. The next level of resistance is the 50-DMA ($83). Despite the IGV remaining in a consolidation, quantitative metrics
have improved over the last week, with Up/Down Volume ratio still above 1 and Acc/Dist Rating improving from -15 to -1. The majority
of ideas are below key moving average or attempting to consolidate; However, select ideas are under accumulation and trading
constructively including CYBR, PLTR, NOW, and VRNS. We advise caution until the IGV and constituents can settle and start a new
rally. Until then, we recommend a selective approach to ideas forming the right side of their bases. Trim ideas breaching key moving
average supports on declining RS lines.
Author: Romeo Alvarez
Romeo Alvarez is a senior equity analyst at William O’Neil + Co., a registered investment advisor serving 400 top-performing institutional portfolio managers worldwide. The firm employs 150 associates in Los Angeles, New York, Boston, and London.
Based in the firm’s Los Angeles office, Mr. Alvarez is a senior equity analyst covering the Americas region and a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Romeo also selects equity initiations to be covered in the Technology sector and regularly reports to clients on innovation and technology developments in Trend Watch.
Mr. Alvarez earned a B.S. in Business Economics from the University of California, Riverside, and an MBA with a focus in Finance from Loyola Marymount University, Los Angeles.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa fell 1.3% last week and closed below the 200-DMA. The index remains in a Rally Attempt. We recommend investors wait for a follow-through day to add risk in Brazilian equities.
- Mexico’s main benchmark fell 1.1% last week and is trading below its key moving averages. The index remains in a Downtrend. We recommend investors avoid adding risk in Mexican equities.
- The total number of Focus List stocks in the LATAM region remains at five. Grupo Comercial Chedraui (CHD.MX; CHDRAUIB:MM) and MercadoLibre (MELI) are actionable.
- Stocks of interest: Companhia de Saneamento Basico (SAB.BR; SBSP3:BZ), Cury Construtora (CCE.BR; CURY3:BZ), Santos Brasil (STB.BR; STBP3:BZ), Marfrig (MFA.BR; MRFG3:BZ) and Rumo (P3M.BR; RAIL3:BZ).
O’Neil TMT Weekly
Software (IGV): The software benchmark gapped down ~5% and breached all moving averages including its 200-DMA ($81). The
next level of price support is $76–78, which coincides with the lows of the prior base consolidation. Quantitative metrics have
deteriorated with the RS line retesting year-to-date lows along with an Acc/Dist Rating of D+. The majority of ideas are pulling back
into bases and testing key moving averages while a number of other ideas are technically weaker and vulnerable to additional
downside pressure including CRM, WDAY, and OKTA. Only a few select ideas are under accumulation and trading constructively
including IBM, PSN, SAP, and VRRM. We advise caution until the IGV and constituents can settle and start a new rally. Until then, we
recommend a selective approach to ideas forming the right side of their bases. Trim ideas breaching key moving average supports on
declining RS lines.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa fell 0.1% last week but remains above all key moving averages. The index is in a Rally Attempt. We recommend investors wait for a follow-through day to add risk in Brazilian equities.
- Mexico’s main benchmark fell 1.6% last week after hitting resistance at the 200-DMA. The index was shifted to a Downtrend from an Uptrend Under Pressure. We recommend investors avoid adding risk in Mexican equities.
- The total number of Focus List stocks in the LATAM region remains at five. Grupo Comercial Chedraui (CHD.MX; CHDRAUIB:MM) is actionable.
- Stocks of interest: Embraer (EA3.BR; EMBR3:BZ), Cury Construtora (CCE.BR; CURY3:BZ), JBS (JBS.BR; JBSS3:BZ) and Rumo (P3M.BR; RAIL3:BZ).
O’Neil TMT Weekly
Software (IGV): The software benchmark was essentially flat last week and is currently testing support at its 50-DMA ($84) followed
by its 100-DMA ($83.50). Overall, the IGV remains in a base consolidation with mixed quantitative metrics including Acc/Dist Rating
increasing to 13 from 4 while the RS line is trading downward with a RS Rating of 63, down from 83 a month ago. The majority of
software constituents have pulled back and are consolidating. However, few ideas bucking the trend and under rising accumulation
include NOW, SMAR, and SSNC. Only four of the 11 software groups in the O’Neil 197, have improved in Group Rank over the last
four weeks with Gaming (#100) and Software-Financial (#7) showing the sharpest improvement, followed by moderate improvement
in Spec Enterprse (#74), while Database (#5) remains a top group. Remain cautious and focus on select ideas attempting to emerge
from constructive bases.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa index declined 1% last week, registering the first weekly loss in five weeks. It still trades above the 200-DMA and remains in a Rally Attempt. We recommend clients wait for a follow-through day to add risk in Brazilian equities.
- Mexico’s main benchmark declined 2.3% last week as it broke below its 50- and 200-DMAs. The index was shifted to an Uptrend Under Pressure as it recorded two distribution days. We recommend clients remain selective while adding risk in Mexican equities.
- The total number of Focus List stocks in the LATAM region remains at five. Nu Holdings (NU) is actionable.
- Stocks of interest: Companhia de Saneamento Basico (SAB.BR; SBSP3:BZ), Santos Brasil (STB.BR; STBP3:BZ), Embraer (EA3.BR; EMBR3:BZ), Weg (WG3.BR; WEGE3:BZ), Cury Construtora (CCE.BR; CURY3:BZ) and Gruma (GRM.MX; GRUMAB:MM).
O’Neil TMT Weekly
Software (IGV): The software benchmark declined ~2.8% and is currently forming a 20-week consolidation base with a pivot of
~$88. The next level of support is at its 50-DMA ($83.7). Quantitative metrics were mixed over the last week, with Acc/Dist Rating
decreasing to 4 from 14, while the RS line had a sharp decline with a RS Rating of 67, down from 71. Similar to the general market,
the IGV is under rotation to SMID cap and value-oriented ideas. Stand out SMID/value ideas at pivot or setting up include APPF, CHKP,
GEN, SSNC, and SPSC. Only five of the 11 software groups in the O’Neil 197, have improved in Group Rank over the last four weeks.
Spec Enterprise (#55), and Financial (#14) showed the sharpest improvement, followed by moderate improvement in Gaming (#135)
and Desktop (#154). Stay selective and focus on ideas that are either breaking out or forming the right side of their base. Trim ideas
breaching key moving average supports on declining RS lines.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa index rose 2.1% last week, marking its fourth consecutive week of gains. The index remains in a Rally Attempt. We recommend clients wait for a follow-through day to add risk in Brazilian equities.
- Mexico’s main benchmark gained 5% last week and reclaimed its 200-DMA. The index was shifted to a Confirmed Uptrend from a Rally Attempt. We recommend clients add risk in Mexican equities.
- The total number of Focus List stocks in the LATAM region remains at five. Inter (IP9.BR; INBR32:BZ) and Grupo Comercial Chedraui (CHD.MX; CHDRAUIB:MM) are actionable.
- Stocks of interest: Santos Brasil (STB.BR; STBP3:BZ), Embraer (EA3.BR; EMBR3:BZ) and Cury Construtora (CCE.BR; CURY3:BZ).
O’Neil TMT Weekly
Software (IGV): The software benchmark pulled back ~1.8% and is currently forming a 20-week cup-with-handle consolidation with a
pivot of ~$88. Next support is along its rising 21-EMA ($85.7). Quantitative metrics were mixed over the last week, with Acc/Dist
Rating decreasing to 4 from 14, while Up/Down Volume ratio still remains above 1. The RS line had a sharp decline with a RS Rating
of 71, down from 83 last week. Similar to the general market, the IGV is under rotation from large cap to SMID ideas. Stand out SMID
ideas at pivot or setting up include APPF, CYBR, VRNS, and SSNC. Only six of the 11 software groups in the O’Neil 197, have
improved in Group Rank over the last four weeks. Desktop (#141), Design (#109), and Gaming (#117) showed the sharpest
improvement, followed by moderate improvement in Spec Enterprs (#52), Financial (#20), and Database (#6). Continue to focus on
ideas that are either breaking out or forming the right side of their base. Trim ideas breaching key moving average supports on
declining RS lines.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa benchmark gained 1.9% last week and retook its 50- and 200-DMAs. Although the action was constructive, the index remains in a Rally Attempt. We recommend clients wait for a follow-through day to add risk in Brazilian equities.
- Mexico’s main benchmark declined 0.2% last week and continues to hit resistance at the 200-DMA. The index remains in a Rally Attempt. We recommend clients wait for a follow-through day to add risk in Mexican equities.
- The total number of Focus List stocks in the LATAM region remains at five. Nu Holdings (NU) is actionable.
- Stocks of interest: Cury Construtora (CCE.BR; CURY3:BZ), Santos Brasil (STB.BR; STBP3:BZ) and Weg (WG3.BR; WEGE3:BZ).
