Software (IGV): The software index reversed mid-week gains following the Fed’s hawkish commentary. The IGV is 13%
off highs and is testing long-term support along its 200-DMA ($391). RS Rating of 63 and A/D Rating of D-. Distribution
remains broad-based as six of 11 of software-related groups are ranked 100th or worse within the O’Neil 197 Industry
Groups (1=best, 197=worst). Most vulnerable are high P/S stocks with no path to profitability, including OKTA and AVLR.
However, the distribution is spreading to high-quality large caps, including ADBE and CRM, as these ideas could be rerated given a tapering/rising rate environment. One area bucking the distribution and under accumulation is the computer
tech svcs group, led by value stocks including INFY, CTSH and ACN, which gapped up on better-than-expected results.
Overall, we recommend a cautious approach on the IGV and software constituents.
Symbol: AVLR
Global Laggards
Highlighted Charts
U.S.: Kincross Gold Corporation ( KGC ), Brinks Co ( BCO ), L3Harris Technologies ( LHX ), Xylem Inc ( XYL ), Nio Inc ( NIO ), Yelp Inc ( YELP ), Gray Television Inc ( GTN ), P V H Corp ( PVH ), MSG Sports Corp ( MSGS ), Toro ( TTC ), Marriott Vacations Worldwide ( VAC ), Sonos ( SONO ), Yeti Holdings ( YETI ), Lancaster Colony Corp ( LANC ), Euronav ( EURN ), Flagstar Bancorp ( FBC ), Royalty Pharma ( RPRX ), National Vision Holdings ( EYE ), Childrens Place ( PLCE ), Flex ( FLEX ), Amkor Technology ( AMKR ), Okta Inc ( OKTA ), Avalara Inc ( AVLR ), Delta Airlines ( DAL ).
Developed: BASF ( ASX.DE; BAS GR ) Volvo B ( VOBF.SE; VOLVB SS ), Kakaku.com ( KAKA.JP; 2371 JP ), Flughafen Zurich ( FHZN.CH; FHZN SW ), Aena Sme ( AENA.ES; AENA SM ), Royal Unibrew ( RBR.DK; RBREW DC ), Christian Hansen Holding ( CHR.DK; CHR DC ), Woodside Petroleum ( WPL.AU ), Banco Santander ( SAN.ES; SAN SM ), Cochlear ( COH.AU; COH.AX ), Grafton Group ( GFTU.GB; GFTU LN ), Kuehne Nagel International ( KNIN.CH; KNIN SW ).
Emerging: Cemex ( CMC.MX; CEMEXCPO MM ), CCC ( CCC.PL; CCC PW ), Chipmos Technologies ( CIT.TW; 8150 TT )
Global Laggards
Highlighted Charts
U.S.: Compass Minerals (CMP), FuboTV (FUBO), Mohawk Industries (MHK), Garmin (GRMN), Freshpet (FRPT), World Fuel Services Corp (INT), Alliance Data Systems (ADS), Mastercard (MA), Bausch Health (BHC), Select Medical (SEM), Mercadolibre (MELI), IAA (IAA), Cirrus Logic (CRUS), Cognex Corp (CGNX), Comcast Corp (CMCSA), Dropbox (DBX), DXC Technology Company (DXC), Teradata Corp (TDC), Avalara (AVLR), Match Group (MTCH), Volaris (VLRS).
Developed: Tosoh (TSHC.JP; 4042 JP), Melrose Industries (MRO.GB; MRO LN), Yakult Honsha (YAHO.JP; 2267 JP), Dcc (DCC.GB; DCC LN), Japan Post Holdings (JPHC.SG; 6178 JP), China Traditional Chinese Medicine (WISH.HK; 570 HK), Canadian Tire (CTC/A.CA; CTC/A CN), Parkland (PKI.CA; PKI CN), Brother Industries (BI@N.JP; 6448 JP), Nippon Express (NX@N.JP; 9062 JP).
Emerging: Carabao (CAG.TH; CBG TB), S-Oil (SSO.KR; 010950 KS)
Global Laggards
Highlighted Charts
U.S.: Anglogold Ashanti (AU), Trinet Group (TNET), Grand Canyon Education (LOPE), VF Corp (VFC), Brown Forman (BFB), Canadian Solar (CSIQ), Brookfield Renewable ClA (BEPC), Cannae Holdings (CNNE), 1Life Healthcare (ONEM), I P G Photonics Corp (IPGP), Avalara (AVLR).
Developed: Svenska Cellulosa Aktiebolaget Sca (SW@G.SE; SCAB SS), IWG (IWG.GB; IWG LN), Wynn Macau (WYNN.HK; 1128 HK), Ping An Insurance ‘H’ (PING.HK; 2318 HK), Hansoh Pharma (HANP.HK; 3692 HK), Fast Retailing (RETA.JP; 9983 JP), STMicroelectronics (STM.IT; STM IM), Softbank Group (SFTB.JP; 9984 JP), Square Enix (ENIX.JP; 9684 JP).
Emerging: Gruma (GRM.MX; GRUMAB MM), Almeera Consumer Goods (MER.QA; MERS QD), Advantech (ADV.TW; 2395 TT).
US Focus
The U.S. market is now in a Rally Attempt. Indices declined for another week, however the Nasdaq (6,686) and S&P 500 (2,280) are slightly off lows for the third consecutive session as the market status was moved to rally attempt. If indices undercut the recent lows the status will be moved back to downtrend.
Won Global View
The U.S. market remains in a Downtrend. The S&P 500 and Nasdaq undercut Tuesday’s lows before rallying back above that level by the close. The Nasdaq managed to close in the upper half of its true trading range, marking a new day one of an attempted rally. The earliest a follow-through day can occur on the Nasdaq is Monday (day four) should 6,686 (-4.8%) hold. The S&P 500 was unable to close
in its upper half and will now need a positive session above yesterday’s low (2,398) or an upside reversal that closes in the upper half of the session to begin counting towards a follow-through day. Only one of the two major indices needs to stage a follow-through day to shift to Uptrend.
US Focus
The U.S. market remains in a Downtrend. The S&P 500 and Nasdaq rallied strongly Friday, holding above Thursday’s low (S&P 500: 2,478; Nasdaq: 7,194) to close the week. We are now looking for this low to hold through Tuesday before a potential follow-through day as early as Wednesday (day four). There is no clear level of support above December 2018 lows of 2,346 (-13.5%), should Thursday’s lows be undercut.
US Focus
The U.S. market remains in a Rally Attempt. The S&P 500 and Nasdaq have now held above the February 28 intraday low (S&P 500: 2,855; Nasdaq: 8,264) for six sessions, despite heavy selling to close the week. Monday will mark day seven of the attempted rally with a follow-through day still needed to move to Confirmed Uptrend. If these lows are undercut, however, the market status shifts back to a Downtrend and we again look for indices to establish and hold above another new low.
US Focus
The U.S. market is in a Downtrend. The S&P 500 and Nasdaq have broken below all major moving average support levels this week. The next level of price support is ~2,822 on the S&P 500 and 8,243 on the Nasdaq.
US Focus
The U.S. market is in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back to their respective 21-DMA after making new all-time highs earlier in the week. Distribution did rise over the last several sessions, though one day will expire on both indices next week. We will likely shift the market status back to Uptrend Under Pressure should indices close below the 21-DMA in the coming days. The next level of support below the 21-DMA is the 50-DMA (S&P 500: 3,274 (-1.9%); Nasdaq: 9,228 (-3.8%).
