The market’s reversal of fortune has been particularly painful in the technology sector. Once high fliers have been struck down, and momentum has gone from loved to loathed. But not all Nasdaq components are getting tossed out with the trash. Some software stocks remain resilient in the face of mass distribution.
Resilience, relative strength, muscle-flexing — call it what you want. The fact is traders seeking stocks to buy should focus on the stalwarts that are holding firm amid the market meltdown. Like a ball being held beneath the water, these favored few are usually the first to pop once the broader selling pressure finally abates.
Indeed, today’s selections aren’t even waiting for the bears to hibernate. They’re ripping now and rest at or near record highs. Let’s take a closer look.
3 Software Stocks to Buy: Workday (WDAY)
“Bear market? What bear market?” So say the countless Workday (NASDAQ: WDAY) stock owners basking in the glory that is all-time highs. The California-based financial and human capital management software vendor reported a stellar quarterly report last month that sent its stock flying.
Since then Workday has been in consolidation mode to work through the overbought pressures that have arisen. The beauty of the digestion is it allows the 20-day moving average to catch up and for a base to form that may well spell an attractive breakout trade.
The key resistance zone to watch is $170. That marks the record high for WDAY, and a break above it should bring all the buyers to the yard.
3 Software Stocks to Buy: Salesforce (CRM)
Salesforce (NYSE:CRM) shares fell prey to the tech stock fallout but thanks to a robust earnings report they’re on the mend. The late-November announcement breathed new life into the ailing shares lifting CRM back above all major moving averages. While CRM stock remains well off its peak, the behavior post-earnings looks promising.
First, the few dips that we’ve seen have been shallow and short lived. The gap area at $133 has been tested and held twice now. Second, volume patterns have shown zero signs of distribution with multiple accumulation days cropping up. This suggests institutions are in a buying, not selling mood.
Once resistance at $145 is finally felled, look for further upside.
3 Software Stocks to Buy: Twilio (TWLO)
Twilio (NYSE:TWLO) rounds out today’s trio with one heck of a volatile, but beautiful chart. With the recent touch of $100, TWLO stock is up over 330% this year. A brief review of its history reveals the ultimate driver of the ascent is earnings. Earnings growth, in particular. TWLO stock has scored four consecutive price jumps on its quarterly reports.
Compared to the carnage elsewhere, Twilio’s clear uptrend stands supreme. Though yesterday’s breakout attempt over $100 failed, I suspect it’s only a matter of time before the stock blows through the $100 mark.
The rising 200-day, 50-day, and 20-day moving averages are all providing potential support beneath and reflect buyers’ dominance across all time frames. And that makes breakouts and price dips all buyable opportunities.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Want insightful education on how to trade? Check out his trading blog, Tales of a Technician.