Don’t fight the trend; Setups in the tech sector

This year has been an excellent example of why we focus on price action and ignore everything else:

  1. Off the March lows, stocks soared higher despite a “weak” economy

  2. Since the summer, stocks climbed higher despite “high” valuations

  3. Since Nov, stocks continue to rally despite “high” bullish sentiment

In this post, I want to show just some of the many bullish charts I’m seeing in the tech sector.

Here’s a custom equal-weight index of 10 software names. It found support at a very logical level in late Oct, and is now up over 30% since. Currently at new all-time-highs (ATHs).

The IGV Software ETF made a breakout last week from a 3-month base. It’s been climbing higher ever since.

SHOP weekly chart shows a powerful uptrend. And it is making a fresh 6-month base breakout this week.

MSFT weekly chart has been consolidating for the past 6-months after that strong rally off the March lows. It’s looking ripe for a breakout. Other large-cap giants like FB, AMZN, AAPL and NFLX are sporting a similar look.

Finally, here’s a longer view of the Nasdaq-100 index. It broke out of 10yr resistance in the summer, retested that line as new support in Sep-Oct, and is now making ATHs.

All these charts are extremely bullish.

Am I saying the economy, valuations, and sentiment don’t matter? No. I’m saying that if/when they do matter, it’ll get reflected in the price action and that’s when I’ll do something about it. For example, if that breakout level on IGV fails, that’s when I’ll change my bullish thesis. Until then, don’t fight the trend. Trading does not need to be more complicated than this.

Thanks for reading. For more charts, you can find me on Twitter and Stocktwits (@alphacharts).