With selective stocks in the cloud space still having continued strength like Citrix Systems, Inc. (CTXS), I feel Red Hat, Inc. (RHT) could be due for a bounce. RHT was hit back in January by weak earnings and has been digesting in this range of $40-$42 for a few weeks now. With the $40 level acting as a strong support level I believe if RHT can get above and close above the $41.60 – $42 level we could see a multi-day up move. Earnings are on March 23, so we could possibly see a run up into the earnings release.
On the other side of things, the semiconductor group is looking very weak. I believe we can look to Avago Technologies Limited (AVGO) for a continued move to the downside. A sector downgrade of the semiconductor stocks by Wells Fargo earlier this week has left few buyers in these over extended tech stocks panicked. AVGO looks to have double topped at $34.60 and the last point of minor support is here at $30.92. A break of $30.92 should lead to continued downside until at least $29.50, which is the first level of major support at $29.50.
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