Coup d'état in Software

(Napoleon Bonaparte addresses the Council of Five Hundred during the Coup of 18 Brumaire)

A sharp post-earnings gap higher in emerging software leader Coupa Software Inc. looks to have temporarily stopped the bleeding in what has been a lackluster performance by most software-related firms in recent weeks. While it may be a tad early to declare a COUP versus software bears, so to speak, it sure must be a relief to bulls to see the IGV and HACK sector ETFs related to many software stocks gap higher this morning. 

As I write this, in fact, COUP is higher by nearly 15% and printing new all-time highs, which is exactly the sort of reaction bulls want to see in many spots after churning for much of the summer. Other software growth players with similar market caps and emerging leadership traits to COUP like OKTA TTD TWLO ZEN will likely need to follow suit sooner rather than later in order for the IGV and HACK to be major players in a potential Nasdaq breakout this autumn.

But first things first, and avoiding a gap-fill lower in the broad market today is imperative for QQQ, in my view. Typically, a gap-fill is not necessarily bearish.

However, given how many traders likely expect a gap-fill today in light of how the market has been acting for the last few months (which means down to roughly $186 on QQQ), I suspect the lack of a complete giveback will go a long way to cementing the elusive major higher low (see QQQ daily chart, below) craved by bulls to help build momentum for an eventual upside range breakout above $190.