Software (IGV): The software benchmark pulled back ~1.6% and is currently testing support at its 100-DMA ($82). Below the 100-
DMA, the IGV is vulnerable to a further downside with no firm level of support until the rising 200-DMA ($76), which is 7% lower. RS
line is in a broader downtrend since peaking in early February. Acc/Dist Rating and Up/Down Volume ratio of 1.1 were decent. Like the
IGV, standout ideas – MSFT, NOW, DDOG – are consolidating along key moving average support. Of the 11 software groups in the
O’Neil 197, Database (# 2, MSTR) continued to remain strong, followed by Edu/Media (#26, DUOL). Spec-Enterprise (#46, HUBS)
had the biggest improvement over the past four weeks. All the remaining groups have declined in rank over the last four weeks, with
Security (#81), Design (#134), and Medical (#173) showing the sharpest decline. We recommend a cautious approach to the IGV and
its constituents as the index is trading below its 50-DMA and testing 100-DMA support. Trim extended ideas and those breaching key
support levels with declining relative strength.
Author: Romeo Alvarez
Romeo Alvarez is a senior equity analyst at William O’Neil + Co., a registered investment advisor serving 400 top-performing institutional portfolio managers worldwide. The firm employs 150 associates in Los Angeles, New York, Boston, and London.
Based in the firm’s Los Angeles office, Mr. Alvarez is a senior equity analyst covering the Americas region and a member of the Global Focus List Committee, which approves all equity recommendations for developed, emerging, and frontier markets. Romeo also selects equity initiations to be covered in the Technology sector and regularly reports to clients on innovation and technology developments in Trend Watch.
Mr. Alvarez earned a B.S. in Business Economics from the University of California, Riverside, and an MBA with a focus in Finance from Loyola Marymount University, Los Angeles.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa declined 1.0% last week. The index remains in an Uptrend Under Pressure with three distribution days. We recommend clients selectively add risk in Brazilian equities.
- Mexico’s benchmark index gained 1.3% last week and was shifted to a Confirmed Uptrend. It currently has two distribution days. We recommend clients add risk in Mexican equities.
- The total number of Focus List ideas in the LATAM region remains at eight. Banorte (GTB.MX; GFNORTEO:MM) is forming the right side of a stage-one cup base.
- Stocks of interest: Grupo Aeroportuario del Sureste (AUS.MX; ASURB:MM), Qualitas (QCC.MX; Q*:MM), Vibra Energía (PRB.BR; VBBR3:BZ), PetroRio (HRT.BR; PRIO3:BZ), Porto Seguro (PSO.BR; PSSA3:BZ), Inter (IP9.BR; INBR32:BZ) and Gps Part. (GPE.BR; GGPS3:BZ).
O’Neil TMT Weekly
Software (IGV): The software benchmark has continued to consolidate in a flat base for the last several weeks and is currently
trading slightly below its 50-DMA ($85) with the next level of support at the rising 100-DMA ($82). Quantitative metrics are subdued,
with an Acc/Dist Rating of C+ along with a RS line that has steadily declined off February highs. Of the 11 software groups, only three
are ranked in the top 50 of the O’Neil 197 including Database (#1), Financial (#34), and Edu/Media (#37). The majority of the remaining
groups have declined in rank over the last four weeks with Security (#63), Design(#116), and Medical (#159) showing the sharpest
decline. We recommend a cautious approach to the IGV and its constituents as the index is trading in a flat base below its 50-DMA.
Trim extended ideas and those breaching key support levels with declining relative strength.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa gained 0.9% last week. The index remains in an Uptrend Under Pressure with three distribution days. We recommend clients selectively add risk in Brazilian equities.
- Mexico’s benchmark index gained 1.3% last week as it bounced off support at the 50-DMA. The index remains in an Uptrend Under Pressure with three distribution days. We recommend clients selectively add risk in Mexican equities.
- The total number of Focus List ideas in the LATAM region remains at eight. Smartfit (SED.BR; SMFT3:BZ) is attempting to break out of a flat base.
- Stocks of interest: Grupo Mexico (GME.MX; GMEXICOB:MM), Banco del Bajio (BJI.MX; BBAJIOO:MM), Cielo (VIS.BR; CIEL3:BZ), Cyrela (3CY.BR; CYRE3:BZ), Porto Seguro (PSO.BR; PSSA3:BZ) and Gps (GPE.BR; GGPS3:BZ).
O’Neil TMT Weekly
Software (IGV): The software benchmark pulled back less than 1% and continues to consolidate in a flat base. IGV is testing support
at the 50-DMA ($85). Quantitative metrics are steady, with A/D number Rating turning positive and Up/Down Volume ratio above 1. RS
line has pulled back from its year-to-date highs over the last few weeks. Of the 11 software groups, five groups are ranked in the top
50 O’Neil groups. However, only three groups showed an improvement in Group Rank over the last four weeks. The remaining groups
showed a decline in Group Rank over the same period with Security/Desktop/Gaming/Design Software and Tech Services registering
the steepest declines. Overall, we continue to remain cautiously constructive on the IGV and its constituents as the index continues to
consolidate along moving average support. Trim extended ideas and those breaching key support levels with declining relative
strength.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa gained 0.2% last week, but hit resistance at the 50-DMA. The index remains in an Uptrend Under Pressure with three distribution days. We recommend clients selectively add risk in Brazilian equities.
- Mexico’s benchmark index gained 0.7% last week and reclaimed its 50-DMA. The index remains in an Uptrend Under Pressure with four distribution days. We recommend clients selectively add risk in Mexican equities.
- Last week, we removed Globant (GLOB) from the Focus List, reducing the total number of Focus List ideas in the LATAM region to eight. Smartfit (SED.BR; SMFT3:BZ) is actionable.
- Stocks of interest: Grupo Mexico (GME.MX; GMEXICOB:MM), Banco del Bajio (BJI.MX; BBAJIOO:MM), Porto Seguro (PSO.BR; PSSA3:BZ), Cyrela (3CY.BR; CYRE3:BZ) and Gps Part. (GPE.BR; GGPS3:BZ).
O’Neil TMT Weekly
Software (IGV): The software benchmark rose ~2.9%, reclaimed its 50-DMA and is attempting to form the right side of a flat base.
Quantitative metrics are mixed as A/D Rating has turned negative while the Up/Down Volume Ratio is above 1. RS line has pulled
back slightly from its year-to-date highs over the last few weeks. Of the 11 software groups, six are in the top 50 O’Neil groups, only
one group (Computer Software-Database) showed an improvement in Group Rank over the last four weeks. The remaining groups
showed a decline in Group Rank over the same period, with Security/Desktop/Gaming Software and Tech Services registering the
steepest declines. Overall, we continue to remain cautiously constructive on the IGV and its constituents as long as the index
continues to consolidate along its 50-DMA. Focus on large cap leaders with good relative strength (MSFT, ORCL, CRM, NOW). Trim
extended ideas and those breaching key support levels with declining relative strength.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa declined 0.3% last week. The index remains in an Uptrend Under Pressure and has three distribution days. We recommend clients selectively add risk in Brazilian equities.
- Mexico’s benchmark index rallied 2.4% last week. The index remains in an Uptrend Under Pressure with five distribution days. We recommend clients selectively add risk in Mexican equities.
- The total number of Focus List stocks in the LATAM region remains at nine.
- Stocks of Interest: Banco do Brasil (IO3.BR; BBAS3:BZ), Cyrela (3CY.BR; CYRE3:BZ), Porto Seguro (PSO.BR; PSSA3:BZ), Inter (IP9.BR; INBR32:BZ), Grupo Mateus (GMO.BR; GMAT3:BZ), Banco del Bajio (BJI.MX; BBAJIOO:MM) and Arca Continental (ARC.MX: AC*:MM). Additional ideas are listed on page 3.
O’Neil TMT Weekly
Software (IGV): The software benchmark broke below the 50-DMA after declining ~1.6% last week and remains in a consolidation.
The next level of support is near $82, which coincides with the top of the prior flat base, followed by the rising 100-DMA ($80).
Quantitative metrics are mixed. Numerical A/D Rating has turned negative and RS line continues to drift lower. However, Up/Down
Volume ratio is at 1. While six of the 11 software groups are in the top 50 O’Neil groups, only one group (Computer Sftwr-Database)
showed an improvement in Group Rank over the last four weeks. The remaining groups showed a decline in Group Rank over the
same period, with Computer Sftwr-Enterprse and Computer-Tech Services registering the steepest declines. ACN will report earnings
on Thursday. Overall, we remain cautious on software names as the IGV and its constituents continues to consolidate. However, we
would be more concerned on a breach of support at the rising 100-DMA. Trim extended ideas and those breaching key support levels
with declining relative strength.
LATAM Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- Brazil’s Bovespa declined 1.6% last week. The index remains in a Confirmed Uptrend with three distribution days. We recommend clients add risk in Brazilian equities.
- Mexico’s benchmark index declined 1.1% last week. The index remains in an Uptrend Under Pressure with five distribution days. We recommend clients selectively add risk in Mexican equities.
- The total number of Focus List stocks in the LATAM region remains at nine. Alsea (ALE.MX; ALSEA*:MM) will be actionable on a break above MXN 68.50.
- Stocks of Interest: Porto Seguro (PSO.BR; PSSA3:BZ), Embraer (EA3.BR; EMBR3:BZ), Inter (IP9.BR; INBR32:BZ), Cyrela (3CY.BR; CYRE3:BZ) and Grupo Mateus (GMO.BR; GMAT3:BZ).
