Rotation into Software $IGV – January 28, 2025
This is Scott at Scott Trades on Twitter with StockMarketMentor.com and your Chart of the Day.
I want to talk about a clear rotation that I think is happening right now in the market. Of course, we’ve all heard, by now, about DeepSeek and what’s happening in China, and how they were able to create something that’s better than ChatGPT with less superior hardware.
What might be happening in the market right now is a bit of a rotation out of semiconductor stocks and out of hardware-based stocks and into software-based stocks. The reason I say that is because yesterday we had a pretty clear selloff with the Semiconductor Index ( NASDAQ: SMH ) under the 200-day moving average and that selloff came on higher than average volume.
I know we did get a nice bounce in NVIDIA ( NASDAQ: NVDA ) today. It’s back above the 200-day moving average. I’m sure NVIDIA ( NASDAQ: NVDA ) when this is all said and done, is still going to be fine, they still are the leader in semiconductors. But what I am also seeing is a lot of movement in software stocks.
Software stocks were all the rage today in our Active Trading Room at StockMarketMentor.com, and for good reason. Look at the software ETF here, IVG ( BATS: IGV ). IVG ( BATS: IGV ) has moved back above the 50-day moving average and did it on huge volume. Look at the volume bar here, this volume that we had today on IVG ( BATS: IGV ) is some of the highest since all the way back here in February of 2023. We’re getting a clear rotation out of hardware and potentially into software.
We saw stocks like CrowdStrike ( NASDAQ: CRWD ) breakout. We saw stocks like GoDaddy ( NYSE: GDDY ) breakout. We’re seeing Sea LTD ( NYSE: SE ) breakout. There’s a ton of software plays right now, but if you’re not involved yet I definitely would recommend or suggest keeping an eye on software here. Because if this move is real we could see a nice resumption of this uptrend here on IVG ( BATS: IGV ). I would definitely keep an eye on IVG ( BATS: IGV ). Of course, if this closes under the 50-day moving average, it comes back down here, and then we get this move back down.
That’s not great, but if it’s able to hold above this 50-day moving average, maybe even base along the 50-day moving average. The 50-day uses price action as a floor here, I think this definitely be a sector that has some legs going into 2025, if we do, in fact, see that rotation out of hardware and into software plays.
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