Stock Exchange: Long-term (Energy) And Short-term (Finance And Software)

J: You have some support on this idea. The fundamental valuation is solid, as the FastGraphs chart shows.

J: I especially like your ideas when there is good, fundamental support as well. But aren’t you worried about the upcoming earnings announcement?

H: That could well be a source of opportunity. The chart is sending a message.

J: To my eyes, it looks like a mixed message. Meanwhile, you are the source of our overall market status indicator. How do things look?

H: Still very positive—breadth, momentum, and risk. It is not quite as strong as a couple of months ago, but still OK.


My newest holding is software. While I have my own basket, you can get the idea from considering the software SPDR (XSW).

If you’re following the market closely, which I do right after checking out the sports section, you don’t need me to tell you things have been a little flat lately. That doesn’t mean I’m gonna just give up and go to cash. I’d only do that if I thought a significant downturn were imminent. Let’s take a closer look at software:

You wouldn’t know it based on the moving averages, but the average price for this ETF has been trending down slightly over the past month. There have been a couple blips up above $58.50, but I’m comfortable with that. I still think there’s opportunity for significant growth here, very much like what we saw back in February. This is particularly true with individual holdings, like Microsoft (MSFT):

Slight decreases have brought the stock down from 2017 highs, creating a potential buying opportunity for savvy investors. If you shop around a bit, you might just find some other bargains in this sector.

J: MSFT earned the reputation as a “cash cow” that did not innovate. Gradually that changed, and the annual fees for software have helped to create an earnings base. That said, the valuation is not exciting.

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The Stock Exchange does not have all the answers, but it provides good ideas and a stimulus for your own trading.

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