I wrote yesterday that this market feels unusually simple right now.
That’s not always the case, but at the moment I really see just two trades.
Because of that, I’m switching it up this week.
Instead of bouncing around the market, we’re going straight into Software to see if there’s anything worth swinging the bat at in a clearly capitulatory environment.
I went through all 119 names that make up the IGV ETF and see a solid poker hand.
If you missed it, I broke down this dashboard and how I actually use it in my process during my weekly show.
Breadth is doing exactly what it does in rotational environments, spreading out and diluting index momentum.
The shorter-term thrust is coming from everywhere except Technology, while longer-term trends remain intact across Industrials, Materials, Energy, Staples, Utilities, and Health Care.
When 30+ percent of the index is lagging and the other 70 percent is quietly improving, the result is stagnation up top and opportunity underneath.
You either own Tech and live or die by a narrow group of names, or you own “everything else” and let improving participation do the work.
Rotation like this doesn’t kill Bull Markets, it just makes the index look worse than the average stock.
The Stalk List
IGV - Software ETF
Everyone is aware at this point that Software is getting hit hard.
The selling has become fast, emotional, and increasingly indiscriminate, very capitulatory in nature.
So instead of trying to call a bottom for the sake of our egos, I’m starting with a very simple filter.
I want bottom-fishing candidates that are still holding their longer-term uptrend, even if the short-term structure is broken.
The 200-week moving average does that job well. It helps separate beaten-down businesses from broken ones.
That’s where IGV stands out.
The ETF is coming directly into its 200-week SMA, with multiple AVWAPs clustering in the same zone.
That creates a clean decision point.
Risk is well defined using last week’s lows, and if this area is going to attract buyers, it should do so broadly across the group rather than in a handful of cherry-picked names.
I already own the other side of this trade. Industrials, Energy, Materials, Staples, Utilities, they’ve all had strong runs and are extended.
If those areas take a breather, mean reversion says the pressure valve releases somewhere else.
A bounce in Software would function well as a hedge against that extension.
The goal here isn’t heroics. It’s executing a bounce with defined risk at a level that actually matters.
I could easily post 20 individual Software charts, wait three days, and then highlight the few that ripped.
Plenty of people do that.
I’m sticking with intellectual honesty and looking at the group as a whole.
Sometimes you go through a hundred charts and realize the cleanest setup isn’t a single name, it’s the ETF that represents them in aggregate.
For me, that’s IGV.
If Software is going to catch a bid, this is where it should happen.
I’m holding my nose and adding a position against the 200-week and the clustered AVWAPs.
If it works, great. If it doesn’t, the stop is obvious.
Anyway, that's my two cents.
I went live Friday to dig deeper into the rotation that’s unfolding right now.
If you missed it, throw it on 1.5x speed and let it rip.
And if you enjoy it, hit the like button. It’s the easiest way to show some support.
