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: RBLX
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq staged downside reversals, retracing much of Wednesday’s gains. Both indices remain within consolidation, with real trend yet to develop. Support remains at the 50-DMA on the S&P 500 and the 100-DMA on the Nasdaq. The distribution day count stands at five each, with one day expiring on the S&P 500 next week.
US Focus
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 pulled back to 50-DMA support after testing all-time highs earlier in the week. The Nasdaq pulled back to its 100-DMA for the second time this month, unable to sustain follow-through day type action Wednesday. Both continue to chop within consolidation with no real trend yet to develop. The S&P 500 has added four distribution days in the past five sessions, clustering near all-time highs. The count now stands at six and five, respectively, with one day expiring on the S&P 500 next week.
US Focus
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq regained their respective 50-DMA this week, with the S&P 500 now trading within 1% of an all-time high. Despite the move, both remain within consolidation with no real trend yet to develop. We view the 50-DMA as the primary level of near-term support and resistance at all-time highs. The distribution day count stands at three each with one day expiring on the S&P 500 next week.
US Focus
The U.S. market is in an Uptrend Under Pressure. The S&P 500 and Nasdaq broke below their respective
50-DMA, staging multiple downside reversals to eventually close near the lows of the week. The S&P 500 is
narrowly holding above 100-DMA (4,491) support before price support at ~4,430. The Nasdaq is now 7%
off highs and sitting on its 100-DMA (15,082). The next level of price support is ~14,755 before the rising
200-DMA (14,411). The distribution day count increased to four and three, respectively, with no expiration
next week.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq pulled back
sharply this week, with both closing below their respective 21-DMA. The next level of support
is September highs at 4,545 and 15,403, respectively, which may also coincide with the rising
50-DMA. The distribution day count remains low at three and one, respectively, with one day
expiring on the S&P 500 next week.
O’Neil TMT Weekly
Software (IGV): The software index continues to consolidate within its pivot range and is currently sitting slightly above
support at its 21-DMA (438.6). RS Rating of 77 and A/D Rating of B-. Outperformance was led by stocks with exposure to
the metaverse, including RBLX, U, and MTTR. These metaverse ideas are in the early stages of expansion with a firstmover advantage. Large caps with exposure to the digital transformation remain intact and warrant an overweight
exposure, including ADBE and ORCL, which are breaking out and remain actionable. Other strong enterprise names
setting up include NOW and ADSK. Large caps have had a better-than-expected earnings season, which points toward
rising momentum through the year-end and into FY22. Continue to focus on quality ideas in the metaverse and in the
digital transformation story.
US Focus
The U.S. market remains in a Confirmed Uptrend. The S&P 500 and Nasdaq are trading at or
near all-time highs and above 10- and 21-DMA support. The distribution day count remains low
at three and one, respectively, with one day expiring on the Nasdaq next week.
Nov 18, 2021 – Weekly Best Ideas (RBLX, SOVO, CFR.CH)
Join our analysts for our Weekly Best Ideas webinar, where they discuss the current outlook for global markets from an O’Neil perspective and delve into the best actionable stock ideas of the week.
O’Neil TMT Weekly
Software (IGV): The software index continues to consolidate within its pivot range after finding support at its 21-DMA
($436). RS Rating of 77 and A/D Rating of B. Despite the tight trading at the benchmark level, individual stocks were very
volatile. Explosive upside moves in metaverse-related stocks RBLX and U as well as DOCN, NEWR, and APP, however,
a number of ideas have turned lower and exposure should be reduced, including DBX, LSPD, and ZEN. Large caps
continue to trend higher in constructive fashion, a few ideas near or approaching pivot include NOW, CRWD, and ADSK.
Overall action across the IGV remains positive, however, allow ideas that have gapped up to consolidate while cutting or
reducing exposure in stocks breaking below key support levels.
