What's Happening?
Investor Jay Woods is closely monitoring three upcoming earnings reports from the software sector, which he believes could potentially trigger a market bounce. The iShares Expanded Tech-Software Sector ETF (IGV) has been experiencing significant drawdowns, largely due to concerns over AI disruption, despite the broader bull market. The ETF is currently down nearly 30% from its peak last year, although there has been some minor buying activity recently. Woods suggests that the earnings reports from Applovin, Datadog, and Unity Software could serve as positive catalysts for a rebound. Datadog is set to report its earnings on Tuesday before the market opens, while Applovin and Unity will release their results after the market closes on Wednesday.
Woods advises swing traders to consider buying if the IGV drops to the $80-$77 range, which he identifies as a major support level.
Why It's Important?
The potential market bounce in the software sector is significant as it could signal a shift in investor sentiment and confidence in the tech industry, which has been under pressure due to AI-related disruptions. A positive reaction to the earnings reports could lead to increased investment in the sector, benefiting companies like Applovin, Datadog, and Unity Software. This development is crucial for swing traders and investors looking for opportunities in a volatile market. Additionally, a rebound in the software sector could have broader implications for the tech industry, potentially influencing other sectors and the overall market dynamics.
What's Next?
Following the earnings reports, market participants will likely assess the financial performance and guidance provided by Applovin, Datadog, and Unity Software. Positive results could lead to increased buying activity and a potential rally in the software sector. Conversely, disappointing earnings could exacerbate the current drawdown. Investors will also be watching for any updates on AI-related disruptions and how these companies plan to navigate the challenges. The broader market will be influenced by other economic indicators, such as jobs data and CPI figures, which are also expected this week.
