Adobe Systems (ADBE), ServiceNow (NOW), (CRM) and other top software stocks gained on Thursday as some found support at their 200-day moving average, aiming to claw back from a broad sell-off in technology stocks.


Adobe stock gained 1.6% to 241.68 on the stock market today. ServiceNow rose 1.8% to 175.28. added 1.6% to 140.07. Workday (WDAY) stock edged up 0.2% to 124.62.

While the FANG stocks — Facebook (FB), (AMZN), Netflix (NFLX) and Google (GOOGL) — have weakened since the summer, software makers have been hammered amid the October sell-off in technology stocks.

IBD’s Computer-Software Enterprise industry group has dived nearly 18% since Sept. 14 as of Wednesday’s market close. Software companies had been among the stock market’s top gainers in 2018. Some analysts had voiced valuation concerns amid the run-up.

Morgan Stanley, in a report published on Thursday, says software stocks could be volatile when companies report September-quarter earnings. Billings, a sales growth metric, as well as operating margins, are key financial metrics.

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“Software seems to be priced for perfection, although margin risk is low,” the report said.

Strong corporate spending on digital projects amid a strong economy has been a plus for software makers.

“Software has cyclical exposure given its dependence on business confidence, capital spending, upselling and seat growth,” Morgan Stanley said.

Most top software stocks have a software-as-a-service, or SaaS, business model. They sell software subscriptions rather than licenses. They provide on-demand software via the internet cloud.

Amid this week’s technology sell-off, ServiceNow stock was down 16% from an intraday high of 206 set on Sept. 13. Adobe stock fell 13% from a high of 277 set on Oct. 2. stock had declined 14% from a high of 160 on Sept. 27.

Shares of Adobe, and ServiceNow found support near or at their 200-day moving average on Thursday.

Software Stocks In IBD 50

Some top software stocks in the IBD 50 roster of fast-growing companies also gained on Thursday.

Veeva Systems (VEEV) gained 1.2% to 90.45. Atlassian (TEAM) rose 0.6% to 79.11. Palo Alto Networks (PANW) was up 1% to 204.58. Paycom Software (PAYC), though, was down 0.4% to 128.15.

While software stocks have been hammered, the FANG stocks are also bloodied. Facebook has dived 29% from late July, while Alphabet’s Google has shed 13%. Netflix is down 22% from early July. Amazon has lost 15% since the start of October. Amazon and Netflix slipped Thursday, while Google and Facebook were up.


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