Is Software Starting to Turn? (w/ Douglas Busch) | Trade Ideas

TL;DR

Software sector displaying bearish signs, suggesting caution for investors.

Transcript

JAKE MERL: Welcome to Trade Ideas. I'm Jake Merl, sitting down with Doug Busch of chartsmarter.com. Doug, great to have you back on the show. DOUG BUSCH: On as always. Thank you, Jake. JAKE MERL: So, you're usually a pretty bullish guy. But are you looking at anything right now that suggests you should be cautious? DOUG BUSCH: Particularly that t... Read More

Key Insights

• 😘 Software sector showing troubling signs with lower highs and bearish divergences.
• 🥺 Leading software stocks like Xilinx and Trade Desk are displaying bearish patterns at all-time highs.
• 🍰 Doug Busch recommends a pair trade with long AMD and short LogMeIn based on technical setups.

Questions & Answers

Q: What are some red flags indicating caution in the software sector?

Doug Busch highlights lower highs, bearish divergences, and weak price action in leading software stocks like Xilinx.

Q: How does Doug Busch suggest playing the current setup in the tech sector?

Busch recommends a pair trade strategy with long AMD and short LogMeIn, advising caution until a resumption of the uptrend.

Q: What are the technical reasons behind Busch's choice of long AMD and short LogMeIn?

Busch points to AMD's strong price action and LogMeIn's weak relative strength, highlighting key technical setups.

Q: What time horizon does Busch expect for his pair trade strategy to play out?

Busch emphasizes focusing on price action and suggests the trades could take time to materialize, depending on market movements.

Summary & Key Takeaways

• Doug Busch warns of troubling signs in the software sector, such as lower highs and bearish divergences.

• Leading software stocks like Xilinx and Trade Desk are showing weakness despite the sector's past performance.

• Busch recommends a pair trade strategy with long AMD and short LogMeIn, based on technical setups.