Software Remains Weak Relatively Speaking

On Tuesday, the S&P 500 finally closed above its 50-day SMA.

It was the first time in nearly 3 months and sets the stage for higher prices ahead. Key price resistance from early June resides just beneath 4200, so there's still roughly an additional 6-7% potential rise to reach that level.

Enter Cadence Design Systems, Inc. (CDNS):

Key price resistance resides at 162.50 and 167.50, but from there it could be clear sailing. Not only has price been trending higher, but CDNS' AD line also just printed another all-time high as Wall Street appears to be accumulating the stock. It's been climbing relative to software nearly all of 2022 and it also just cleared relative price resistance vs. the benchmark S&P 500.

What does this mean?

• Should money begin rotating more heavily into software, look for CDNS to make its next breakout and maintain its leadership position.

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