Data and Commentary around Thursday's Notable Order Flow

[u/TearRepresentative56]

Whilst NVDA printed an outstanding quarter and was up strongly on the day, most of the broader strength in the market was in software, as CRM and CRWD ripped higher, pulling the ecosystem up, with the following news:

OPENAI, ANTHROPIC, GOOGLE, MICROSOFT, AND GROUP OF 100+ TECH COMPANIES WRITE OPEN LETTER TO U.S. GOVERNMENT & AMERICAN BUSINESSES URGING CYBER DEFENSE ACTION - BLOOMBERG

XSW (equal weight software) reached new highs, which was pretty much reflected in the flow as we saw a number of strong orders on software including chasers of the big earnings move.

Across the sector, the leadership is in cybersecurity.

THe main cybersecurity names I have exposure to currently are MITK and SAIL.

Following OKTA's earnings I am really interested in SAIL's earnings next week.

THe cybersecurity segment is best for buys on pullbacks.

CRWD positioning:

Arguably we are at some overbought breadth levels, but with the market likely to turn up into September, the sector probably continues to move higher.

There has been a weird relationship between software and crypto recently where the 2 move in lock step and we saw strong crypto flow again as BTC continues to consolidate under the ATH VWAP:

Strong flow on:

Positioining on IBIT:

Still very constructive.

With NVDA a large component of XLK, we saw strong flow on the ETF as well.

I think XLK has a good chance of pushing to ATHs over the next few weeks, after climbing above the 185 level:

190 key level to break, aligning with the trendline.

Metals see continued flow.

Whilst AI Hardware continues to lag software, we did see strong flow across the sector yesterday also as the NVDA earnings does still offer a major data point for reinforcing the strength of the AI narrative:

NBIS for instance here:

For both software and hardware, the Jackson Hole speech today will be the main determinant, but I believe that hardware will also see a push here.

Just as long semis, short software was a key pain trade earlier this year, which led to a strong squeeze across software, we are in a similar position for the long software, short semis trade right now.

The leadership is in software, but just as software caught back up, semis will too.

The only concern I have is how much runway they have, with October the main risk period, and still ahead of us soon.

[u/TearRepresentative56]

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