While Software Stocks Crash, Is Real Estate Preparing to Take Gold?
Are the software stocks done falling? Who knows? But real estate is preparing for a big move.
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I love the Olympics. It will never cease to amaze me how people can train nearly their entire lives, know they have the perfect routine, jump, performance, whatever, and somehow some way they manage to pull it off for the 10,000th time, doing it better than every one of their peers to win the Gold.
But there are the inevitable accidents as well. By now, I assume most of us have seen the terrible photos of the American downhill skier Lindsey Vonn take a spill on the hill this past weekend. Then there is the concern. Can she move? Can she get herself up and off the hill? In this case, she was airlifted out.
In many ways, the software group is like Lindsey Vonn. The spill they took over the last few weeks has left investors wondering: can they recover? Will they rise again to compete in the marketplace? Or should we just help them off the hill and let them recover on their own?
That is a standard reaction to such a plunge in a stock or group. You’re not sure if you should trust it to recover. You’re not sure if it can make a V bottom or if it will take time to repair the damage. As I have noted, I think most of these charts will begin to sort themselves out and differentiate themselves.
Yesterday, I showed you the chart of Roper Technologies, noting that it seemed to be about two weeks ahead of the IGV chart. But now take a look at Monday.com, which is still gapping down—on quite high volume. Will this be it for MNDY, or will this be like the November or August gap down? We don’t know yet, but there are clearly still landmines out there.
Then take a look at Microsoft (MSFT) , which finally filled the gap from April last week and bounced quite well on Monday. And it bounced on a downgrade of the stock. You see? They are trying to sort themselves out. Investors are trying to decide which ones will be winners and which ones will no longer be able to compete. That takes time and patience, something most of us seem to lack (I know I have no patience!)
So when I say to you I think software bounces, as I did on Friday morning, I will tell you that I don’t know yet which stocks appear as if they should start to hold or which stocks will tempt us as MNDY did on Friday, only to tumble yet again.
The same way I asked you to stop focusing so much on the Mag 7 back in November and pointed out the developing chart in XLB, I’d like you to take a look at (IYR) , an ETF to be long REITs. I believe I showed you this chart back in December, as it was rounding under. It’s basically gone nowhere for a year. Those are the charts that have been catching my eye lately. And hey, if the software stocks go sideways for a year, I’d probably like that too. In the meantime, maybe IYR will go for the Gold.
