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“Our conviction in the essential role of CPUs in the AI era continues to grow” – Lip-Bu Tan, Intel (INTC)

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Wait. Isn’t the market up so far this year? For years, investors became conditioned to think that if the market rallies, software stocks will lead the gains. It was nearly 15 years ago, but Marc Andreeson’s famous article titled “Why Software Is Eating the World” reflected a theme that dominated the market for years – it was software’s market, and everyone else was just on the sidelines watching. Based on the last several months of trading, it appears as though the market is seriously questioning whether software has had its fill.

The iShares Expanded Tech-Software ETF (IGV) used to be a guaranteed way for traders and investors to generate alpha, but so far this year, the ETF is down over 5%, and it has pulled back about 20% from its record high in September to levels it hasn’t traded at since late April.

We covered software in yesterday’s Chart of the Day, and we’ll expand on that analysis below.  Looking at the software ETF’s ten largest holdings and their performance through Thursday’s close, they’re all down YTD, all down over the last week, all below their 50-day moving averages, and all at oversold levels. Alpha? How about anti-alpha?