2 Stocks Consolidating Ready to Resume Uptrend | Exchange places with Tom Bowley

My preference is to simply trade strong stocks consolidating and eliminating weak hands. Hopefully, it will be time to ride the next wave higher. Software ($DJUSSW) has been consolidating over the past few months and appears poised for a bounce from its recent 50-day SMA test.

The software is close to relative support and this period of consolidation has brought RSI down to the key 40-50 range. I didn’t comment, but if you look back at recent highs, you can see a negative divergence with lower PPO numbers. When this happens, I look for a follow-up PPO centerline test and/or 50-day SMA test to “reset” the momentum. Both were essentially achieved during this take-profit period.

Last week’s sales actually brought down volume. The coming strength and breakout could result in many software stocks regaining strength starting in early 2024. Two things to consider are:

Service Now (NOW):

Computer Science (INFA):

NOW took the usual route when peer groups merge. It’s all integrated together. But INFA is threatening a breakout just as the software is poised to regain its power. The fact that INFA is trying to break out at a time when money is moving away from software is especially encouraging. But first a breakthrough must be achieved.

10 solid settings

This weekend I contributed a total of 10 breakouts/reversals/setups to the EarningsBeats.com YouTube channel. Please check it out and leave your feedback in the comments section. Also, please “Like” our video and “Subscribe” to our channel!

10 solid settings

education series

Last week we kicked off our April 4-pack training series, covering candlesticks (last Monday, April 8 – available for recording), price support/resistance (today at 4:30 PM ET), and divergences (next Monday, We provided a lecture on April 15th at 4:00. :30pm ET) and Trading Gap (Monday, April 22nd at 4:30pm ET). Click here to access last Monday’s candlestick recording and register for future events, including today’s event.

Happy trading!

tom