Bright Future Today
  • Investing
  • Business
  • World News
  • Stock
Stock

Here’s Why You Should Be Buying Software NOW

by July 1, 2024
July 1, 2024

The recovery in semiconductor shares ($DJUSSC) last week, in my opinion, was quite weak. Much of the strength occurred by 10am ET, and the balance of the days really didn’t see much progress back to the upside. Accordingly, I’d call the rebound more market maker manipulation than anything else. I believe we’re going to see a difficult period for the semiconductors for awhile and, make no mistake about it, I’ve been VERY bullish semiconductors in 2024 thus far.

I do see a further rise ahead for U.S. equities, but if semiconductors, which account for 11% of the S&P 500 and 25% of the NASDAQ, don’t perform as well in the second half of the year, what areas might pick up the slack and lead our market higher?

Software

We just saw a solid quarterly earnings report from Adobe Systems (ADBE) and the stock exploded higher, gaining more than 20% since that report two weeks ago. Overall, however, software had been lagging on a relative basis. In fact, its relative performance over the past 6 months (1st half of 2024) hasn’t been exciting at all:

Over the past two weeks, though, the character of the software chart has changed. We’ve seen an absolute price breakout above a period of consolidation that’s lasted for months. Note, in the bottom panel, that software also broke its relative down channel. In other words, its 5-month period of underperforming appears to have ended.

You should also be aware that software stocks have the tendency to outperform during the first month of all calendar quarters. I’ll summarize that in a moment, but first here’s the visual seasonality chart:

And here’s the summary of how quarterly performance breaks down for the group:

Month 1 (January, April, July, October): +8.8%
Month 2 (February, May, August, November): +3.5%
Month 3 (March, June, September, December): +3.0%

It’s also worth noting that July (+2.6%) is the 2nd best calendar month of the year for software, trailing only October (+3.1%). The fact that software just broke out after a lengthy basing period only adds to the bullishness here.

To drive home this seasonality point even further, consider that since this secular bull market began in 2013, software has risen EVERY YEAR during July and its average July return has been 3.7%. It’s very easy to get behind the software space right now.

One final point about software’s leadership during the current secular bull market. While it hasn’t really been a great leader the past few years as relative strength vs. the S&P 500 has been going up, then down, the long-term relative picture is quite different. Check out how strong software has been, at times, leading the secular bull market advance:

From 2015 through part of 2020, software not only soared on an absolute price basis, but check out its relative strength. This is one of those industry groups that can scream higher on a relative basis as well, and I believe we could be starting one of those periods. The $DJUSSW:$SPX ratio is almost exactly where it was in mid-2020. We’ve seen no “net” leadership over the past 3 years. I do expect that to change and the recent price breakout may have just sparked the group.

During my Weekly Market Recap video, I discuss software at length and highlight several key software stocks worth considering for a big second half run. Simply click on the link for this week’s show, “Here’s Why Software Will EXPLODE In The 2nd Half of 2024” and feel free to leave me a comment. Also, please be sure to hit the “Like” button and “Subscribe” to our YouTube channel while you’re there.

I will also be highlighting a software stock in my FREE EB Digest newsletter on Monday. If you’re not already a free subscriber, CLICK HERE and sign up with your name and email address. You don’t need a credit card and you may unsubscribe at any time.

Thanks so much for your support!

Happy trading!

Tom

previous post
Week Ahead: Nifty Creates Resistance In This Zone; Continue Guarding Profits At Higher Levels
next post
Nike expects more sales declines as it attempts a comeback

You may also like

Two Down and Two to Go – Capitulation...

May 7, 2025

Week Ahead: While NIFTY Continues To Consolidate, Watching...

May 7, 2025

The Best Five Sectors, #18

May 7, 2025

Four Charts to Track a Potential Market Top

May 7, 2025

Will Trump’s Foreign Film Tariffs Crush Streaming Stocks?...

May 7, 2025

One Rule to Drastically Improve Your Trading

July 4, 2024

Technology Shares SOAR to New All-Time Highs

July 4, 2024

Should You Be Worried About Poor Market Breadth?

July 3, 2024

Could AMZN’s Stock Hit $3 Trillion Valuation? What...

July 3, 2024

Market Breadth is Narrowing – Should You Be...

July 3, 2024

    Join our mailing list to get access to special deals, promotions, and insider information. Your exclusive benefits await! Enjoy personalized recommendations, first dibs on sales, and members-only content that makes you feel like a true VIP. Sign up now and start saving!


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Israeli military issues unprecedented evacuation warning for Yemen’s international airport

      May 7, 2025
    • India launches military operation against Pakistan, explosions heard

      May 7, 2025
    • Netanyahu chooses war – and his political survival – as Israelis demand hostage deal

      May 7, 2025
    • Israeli airstrike on central Gaza school compound housing displaced people kills 22, as military operation intensifies

      May 7, 2025
    • India and Pakistan are on the brink of all-out war. Here’s what we know

      May 7, 2025
    • About us
    • Contacts
    • Privacy Policy
    • Terms and Conditions
    • Email Whitelisting

    Copyright © 2025 brightfuturetoday.com | All Rights Reserved

    Bright Future Today
    • Investing
    • Business
    • World News
    • Stock