Software Has Been Weak, But We May Have A New Leader

Manhattan Associates (MANH) blew away its revenue and EPS estimates last week, posting record revenues and profits in the process.

It had bottomed relative to its software peers all the way back at the beginning of February, which perhaps was giving us a clue that business conditions were improving. Well, we now know it as fact. After reporting earnings, MANH exploded through two key short-term price resistance levels on its heaviest volume in over a year. Not only was it a strong day, but the buying didn't end at the opening bell. MANH opened just beneath 122 and traded higher over the next three days:

Enter Manhattan Associates (MANH):

I've drawn two green lines to identify short-term price support for entry on a future pullback. I'd add gap support at 121.77 as a potential 3rd entry point. If MANH is able to negotiate overhead price resistance near 146, where previous rallies failed in January, March, and April, then I'd find it less likely that MANH would see a selloff strong enough for it to reach all three price support levels. In this case, the rising 20-day EMA will eventually be tested and could be used as an entry point. Ultimately, I see MANH rising in the second half of the year to reach the November 2021 high in the mid-180s and possibly higher.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.