A broad sell-off in the software sector turned the Nasdaq composite into a rare underperformer in stocks today. At 3:30 p.m. ET, the Nasdaq eased less than 0.2% but the Dow Jones industrial average rallied 0.7%. Hot new Chinese IPO iQiyi looked set to snap a huge four-week winning streak.
Red Hat (RHT), the expert in open source business software, gapped well below the 50-day moving average and plunged 12% in huge turnover despite posting decent fiscal Q1 results (EPS up 24%, revenue up 20%). The big drop triggered a sell signal for new shareholders.
Those who have a large profit cushion in the stock could afford to wait. Why? The stock still trades above its long-term 200-day moving average.
Red Hat’s desktop software industry group fell 4.9%, the worst among 197 industry groups tracked by IBD each day.
Strength in the oil patch helped the Dow Jones industrials’ cause following OPEC’s decision to raise output by 1 million barrels a day.
The S&P 500 rose nearly 0.4%. But at 2759, it’s poised to fall nearly 0.7% for the week. The large-cap benchmark rallied a combined 2.5% over the prior four up weeks.
The small-cap S&P 600 edged 0.2% lower. But at 1039, the index still boasts a solid 11% gain since Jan. 1.
