Software Back Down

After a massive bounce in May, software stocks have done nothing but trade lower so far in June.  As shown below, the iShares Software ETF (IGV) has even broken back below its 50-day moving average after sitting more than 20% above it at the start of the month.

Price charts for some of the biggest software stocks continue to look awful.  Adobe (ADBE) and Salesforce (CRM) have been front and center in the “AI Doom” trade, and after briefly stabilizing last month, they’ve gone back to “falling knife” status over the last couple of weeks.  Microsoft (MSFT) and ServiceNow (NOW) also looked like they had the potential to stick the landing and form new uptrends last month, but these two have also seen nothing but red in June.  Coming into today, MSFT was down 18% on the month!

Interestingly, the AI infrastructure stocks are getting crushed today, which has caused money to flow back into software stocks (MSFT is up 2% in early trading).  This is a continuation of the rotation trade going on that has seen software fall when semis rally and vice versa.

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