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The last standing industry group – enterprise software, was hit hard last Monday Monday, which basically marked the lows. Just when everyone was turning bearish and one of the best money managers of our times – Stanley Druckenmiller appeared on CNBC to tell us that he sold all his stocks when Trump tweeted about new tariffs in early May, we saw a face-ripping rally.
Most momentum software stocks had a 20-30% intra-week price range. Look at the price action in COUP, MDB, OKTA, TWLO, AYX, SHOP, TTD, etc. Whatever new or old short sellers were hanging out in those names, were squeezed out of their positions.
After epic rallies last week, most software stocks are technically extended. Unless you are a skilled intraday trader, it makes no sense to chase them here from a risk-to-reward point of view. The biotech sector is looking a lot more interesting with setups in TNDM, VCYT, ASND, and others.
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