Today, many of the leading cloud software stocks are declining sharply lower. Market leading cloud software stocks such as Zoom Video Communications (ZM), Shopify Inc (SHOP), The Trade Desk (TTD), Teladoc Health Inc (TDOC) and many others are down by more than 2.0%. It should be noted that this sector has been one of the hottest industry groups in 2020, so a correction is not necessarily a death sentence for the group. Sometimes a sector can simply run too far and then pullback or even stage a short term correction.
Another way to play and trade the cloud software stocks is to follow the ishares Expanded Tech Software Sector ETF (IGV). This ETF holds stocks such as Salesforce.com (CMR), Adobe Inc ADBE), Microsoft Corp (MSFT), Oracle Corp (ORCL) Service Now (NOW) and several others in its portfolio. So it gives us a very good picture of what the cloud software sector is doing. Traders should watch for daily chart support for the IGV around the $270.00 level. This support area is where the ETF broke out in mid-June before making a new all time high on August 6th, 2020. A failure to hold this key daily chart support level would indicate a much larger decline could be underway.
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