The outlook for software stocks is looking better, buy Datadog – BTIG

Software stocks (NYSEARCA:XSW) are holding above a big base formation with relative strength that is trying to break out, said Jonathan Krinsky, chief market technician at BTIG, in a note.

The index is up 3.92% year-to-date, although down today 1.30%.

Microsoft (MSFT), however, continues to trade poorly relative to the broader market. The stock is down 2.68% from six months ago, and down today 2.89%, although up 10.51% year-to-date.

“In absolute terms it remains ok above 400, but the one-year relative low is not a great sign,” said Krinsky.

Datadog (DDOG), on the other hand, is breaking out of a base formation. It is up 7.73% from five days ago, up 35.67% from a year ago, and up 0.29% today.

BTIG’s price target for Datadog (DDOG) is $143 – the stock is currently at $123.