Eoin Treacy's view
Review of "cloud computing" related shares - I last reviewed shares in this growth sector on September 6th and thought this might be an opportune time to take another look with some breaking to new highs.
Technology remains a Fullermoney favourite not least because of its relative performance but because this sector has a well proven ability to create major global franchise companies capable not only of dominating a niche but of creating whole new sectors. In my opinion, technology offers one of the best prospects for the USA to be able to grow its way out of its current fiscal difficulties. The commonality of outperforming shares within the tech sector gives us an indication of where this growth is coming from. There is a high probability that cloud computing offers the next big step in terms of technological development and efficiency.
Citrix Systems has accelerated sharply since July and is now quite overextended relative to the 200-day MA. A reaction of greater than $6 would mark an inconsistency and the likely onset of a reversion towards the mean.
BMC Software has rallied impressively over the last month and is currently testing the upper side of the yearlong range near $40. A sustained move above that level would indicate a return to medium-term demand dominance.
Check Point Software Technologies continues to consolidate in the region of the April highs but needs to sustain a move above $36 to indicate a return to medium-term demand dominance.
Cognizant Technology remains in a consistent albeit steep uptrend. A sustained move back below the 200-day MA, currently in the region of $52 would be needed to question medium-term upside potential.
Oracle broke upwards to new 9-year highs last week and has so far held the gain. A sustained move back below $24 would be required to question medium-term uptrend potential.
Juniper Networks continues to rally towards the April highs near $32 and needs to sustain a move above $33 to complete the long-term base.
Amazon traded in a relatively tight range mostly between $120 and $140 as it unwound its overbought condition relative to the 200-day MA. It broke upwards this week and a clear downward dynamic would be required to check momentum beyond a brief pause.
Google has underperformed the above shares of late, at least part as investors reacted to the company pulling out of China. However, this week's action suggests the difficult period for the share may be ending. It has now rallied to break the progression of lower rally highs and is back above the 200-day MA. A sustained move below $500 would be required to begin to question scope for further upside.
It is not clear just yet what Apple's cloud strategy is likely to be but its performance is unquestionably impressive. It ranged mostly above $250 from late April as it unwound its overbought condition relative to the 200-day MA and broke upwards to new high ground this week. A sustained move below the MA would be required to question the consistency of the medium-term uptrend.
Eoin Treacy's view