A countertrend buy signal has flashed in this software name, says Katie Stockton

Semiconductor stocks have delivered outsized gains in recent weeks, and the most common question we are getting now is when to take profits. In steep uptrends, our approach is to monitor short-term trend-following gauges rather than trying to pick a top. For stocks like Micron (MU) , the slope of the 20-day moving average (MA) is a simple but effective proxy for short-term trends. Once it rolls over, it tends to be a good time to reduce exposure to a degree and let the trend reset. MU is in a steep uptrend, with a recent flag breakout reinforcing short-term upside momentum. The steepness of the uptrend warrants risk management because the stock is stretched roughly 44% above trailing support from its 50-day MA ($569). In cases like these, we watch the 20-day MA as the key short-term trend gauge. When the 20-day MA is rising, we generally assume the path of least resistance is higher. Once it begins to roll over, the risk of a correction increases. When profit-taking unfolds in MU and its peers, relatively oversold software stocks could benefit . A ratio of ETFs representing semiconductors versus software has completed a short-term double top pattern associated with a counter-trend "sell" signal from the DeMARK Indicators®. A decisive break below the 50-day MA would mark an even more meaningful shift in favor of software over semiconductors. The charts suggest the turnaround in software stocks that we highlighted in early May still has room. …