The Linchpin for This Market Right Now

A linchpin, also spelled linch pin, lynchpin, or lynch pin, is a fastener used to prevent a wheel or other part from sliding off the axle upon which it is riding.

With continued headlines regarding escalating tensions towards Iran over the weekend, not to mention a still-elevated CNN Fear & Greed Index (although there still may be too many eyes on that index for it to mark the sort of top many would expect), stocks opened in the red again this morning. 

However, as I write this there is quite a bit of green on my screen with the Nasdaq plays more than holding up their end of the bargain. Large caps like AAPL AMZN FB GOOGL NFLX are quite strong and have suffered no technical damage since the Iran news hit late-last week. 

That said, as we discussed with Members over the weekend in the full-length video, software stocks were likely to be the "linchpin" for this market going forward. Our reasoning was due to the biotech and chip stocks likely cooling off just a tad short-term while software/security/cloud stocks would presumably enjoy a re-rotation as former leaders which had taken a respite into the back end of 2019. 

As a result, names like COUP RNG TTD, among others, are not far or right at their all-time highs this morning, while beaten-down names like CRWD ZM are waking up in a major way. Moreover, we can see some speculative fervor come back into the sector with recent IPOs like DDOG and DT perking up, too.

You can see the IGV sector ETF daily chart, below, breaking to fresh highs as we speak, giving bulls legitimate reason to believe that the Iran news has been more of an excuse for some near-term broad market profit-taking than a catalyst for a major correction. 

Going forward, I am looking to see whether the resurgence of software names sparks more inflows into a sector which has demonstrated previously that it can lead the market to fresh highs.