Coming Home for the Holidays

In the midst of what seems like too many market players and pundits alike focused on whether or not we see another pullback before a potential year-end move higher, my focus is more on the underlying health of various key sectors. 

Recently, we have seen the likes of semiconductors flash spurts of brilliance, although they be able to reasonably digest any negative comments (if any) towards China by President Trump when he delivers a speech sometime after 12:30pm EST today. In addition, the biotech/healthcare space has seen considerable improvement, with various names surging the last few days. 

And then there is the software complex, a group which led the market higher earlier this year in the IGV and HACK ETFs. 

However, the glaring weakness in many software growth stocks earlier this autumn unquestionably threw cold water on general risk appetite for the market, combined with geopolitical and monetary policy indecision at the time, to boot, not to mention concerns about global growth slowing. 

Fast-forward to this week, though, and the IGV ETF, below on its updated daily chart, is sure giving hope to bulls that the worst may be over. As we noted on this website and for Members just a few weeks back, the multi-quarter prior support area (light blue line, around $205) simply must hold in order for bulls to stave off a more serious sector breakdown headed into the end of 2019. 

And with the recent pop in the sector, looking at individual names like TTD, for example, we have the makings a resurrected sector given that IGV is now trading at its highest level since early-August. 

Names like COUP DAVA DOCU RNG have displayed fairly good relative strength. But it will take much more than that for a sector resurgence into the holidays, namely more strength from downtrodden issues like MDB TEAM TWLO and ZM.