The Swing Trader’s Brief: All-Time Highs, War and the Software Comeback
Introduction
We’re heading into the week with the market sitting at all-time highs, which always looks clean on the surface but deserves a deeper look underneath. The rally has been impressive, especially given everything going on in the macro backdrop. Inflation concerns, geopolitical tensions, and global uncertainty were all in play during the pullback, yet the market refused to break in any meaningful way and instead powered higher.
Market Update: A Powerful Reclaim and Breakout
The move off the lows has been relentless. What stands out most is how the market pushed through every key level without hesitation. After the pullback, price reclaimed the 9 EMA, then the 50-day moving average, then the 200-day moving average, and eventually took out prior highs.
That kind of action signals strong demand and aggressive buying pressure. At the same time, when markets move this quickly, you always have to ask whether things are getting a bit extended in the short term.
Market Breadth: A Quiet Divergence
Even though the indexes are printing highs, the participation underneath is not quite as strong. The equal-weighted S&P 500 has been lagging, which tells us the rally is being driven more by larger-cap names rather than broad-based strength.
On top of that, fewer stocks are trading above key moving averages than you would expect at all-time highs. This type of divergence doesn’t mean the market rolls over immediately, but it does suggest that the foundation of the move is not as strong as the headline numbers imply.
Software: A Potential Shift in Leadership
One of the most interesting developments right now is what’s happening in software. This group had been lagging for a while, largely due to concerns around AI disrupting traditional software models.
Now we’re starting to see a shift. Many names are forming bottoming patterns with strong accumulation and signs of capitulation. Classic “W” structures are showing up across the group, which often precede sustained moves higher. If this continues, software could go from laggard to leader, and that would be a major change in market dynamics.
Sector Rotation: What’s Leading Now
Looking across the market, leadership has been rotating. Big tech, housing, and financials have shown strength, especially following earnings. Software is starting to turn, which is something we want to keep watching closely.
At the same time, energy is beginning to cool off. That’s generally constructive for the broader market since lower energy prices can ease inflation pressure. Some short-term pullback in extended areas like big tech is normal, but what matters is whether new groups step in to carry the market forward.
Key Events This Week
There are a few important data points on deck. Retail sales will be front and center, especially since retail stocks have recently bounced hard off the lows.
Later in the week, jobless claims and consumer sentiment will give us additional insight into the strength of the consumer. These reports have the potential to drive short-term volatility depending on how they come in versus expectations.
Geopolitics: The Constant Variable
Right now, the biggest wildcard remains geopolitical tension, particularly in the Middle East and disruptions around key trade routes.
We’ve seen the market react sharply to these headlines, often overreacting in both directions. The key is to stay level-headed. Pullbacks driven by headlines tend to create opportunity if you can avoid getting caught in the emotional reaction.
Software Stocks to Watch
UiPath (PATH)
A clear relative strength name that has already broken out on earnings and continues to trend higher. It is approaching a key level near its IPO highs around 65, which could act as a major breakout trigger if it gets there.
Fastly (FSLY)
Had a strong earnings move followed by a volatile pullback that held support at the 50-day moving average. Now pushing back toward resistance, and a move above the 9 EMA could open up a run back toward the top of its range.
Dave (DAVE)
Trading within a defined range and approaching a breakout zone around the mid-2s. If momentum builds, this has room to run toward prior highs, making it more of an anticipation or swing-style setup.
AppLovin (APP)
Showing a bottoming “W” pattern with improving money flow. The key trigger here is a reclaim of the 200-day moving average, which could signal a transition into a stronger trend.
Palantir (PLTR)
Another name forming a constructive base with a W pattern. The main level to watch is the 200-day moving average, where a breakout could bring in momentum buyers.
Oracle (ORCL)
One of the cleaner patterns in the group, with a confirmed breakout from a W formation on strong volume. Currently targeting a move toward the 200-day moving average and prior gap resistance.
Shopify (SHOP)
While often categorized as retail-adjacent, it remains a key software application name tied to e-commerce infrastructure. Strength here reflects broader recovery in retail and digital spending trends.
Final Thoughts
The market is strong, but not without nuance. You’ve got highs in the indexes, some cracks in breadth, and a heavy dose of geopolitical uncertainty. At the same time, sector rotation is creating fresh opportunities, particularly in software, which is starting to wake up.
This is the kind of environment where you stay flexible. Respect the strength, but don’t ignore the signals under the surface.
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