By Doug Busch
Software stocks have endured a prolonged and painful stretch, with many names falling sharply from their highs as rising rates and slowing growth expectations weighed on them.
What was once a market leadership group quickly turned into one of the weakest areas, marked by persistent selling pressure, broken charts, and a clear loss of investor confidence. Even as other sectors like semiconductors powered ahead, software largely remained stuck in a downtrend, reflecting just how out of favor the group had become.
Some green shoots are beginning to appear, with Monday's iShares Expanded Tech-Software ETF gaining more than 5%. That was the fund's best daily return since April 9, 2025, when it surged by 11% just after the Liberation Day lows.
Last week brought some downgrades of Docusign, Veeva Systems, and Autodesk. Not the most visible names, but this is a start to flush out weak holders and potentially usher in a new set of buyers. Monday brought news that Atlassian was being removed from the Nasdaq 100, so one could say the market is starting to "throw in the kitchen sink."
Let's look at three high profile names that will significantly determine the near term direction of the beaten down software space.
Oracle, an enterprise software play, is down 20% year to date, but it is up 7% over the last five sessions. The stock trades 55% below its most recent 52 week high and has not recorded a three week winning streak since last September.
Looking at the stock's daily chart shows that it has been weak against software peers on the ratio chart digesting a fourth quarter downtrend since the start of 2026. Its 200-day simple moving average started to slope lower in recent weeks and on Monday the stock broke above its 50-day simple moving average for the first time since last October.
Weakness began with a bearish engulfing candle and a harami on Sept. 11 and Sept. 23, respectively. To start the week Oracle broke above a bearish descending triangle, and we know from false moves come fast ones in the opposite direction. Enter at $159 and this stock could trade toward $220 by late 2026, which would be a 41% gain from current prices. Remain bullish above $140.
Oracle was trading around $163 Tuesday.
CrowdStrike, a former best-in-breed security software company, is down 14% year to date. It has declined 16 of the last 23 weeks and last week it fell 5%, closing at the lows for the weekly range that was $70 wide.
Looking at the stock's daily chart it is trading 29% below its 52 week high. Notice that it has acted very firmly against software peers as seen on the ratio chart against the IGV since last September.
Problems started not long after a breakout above the cup-with-handle pivot of $507.30, which was taken out on Oct. 8. A bearish evening star completed on Nov. 12 and it sank $200 until a bullish morning star completed on Feb. 25, a bullish island reversal on March 30, and a bullish engulfing candle on Monday. All three of these patterns made a higher low which formed a bullish ascending triangle. I think this trades toward $450 by mid 2026, a 12% gain from current prices. Remain bullish above $380.
CrowdStrike was trading around $400 Tuesday.
Circle, a fintech company focused on digital payments and blockchain infrastructure, is 67% below its 52 week high, even with a robust 12% advance Monday. It is on a three week losing streak that has shed more than 30%.
Looking at the daily chart shows the volatility this name has endured since coming public. Notice how round number theory played a role early on with a bearish shooting star on June 23 at the $300 level. A bearish engulfing candle followed on July 18. On the ratio chart against the IGV it could be building a cup with handle pattern. Monday completed a bullish morning star, and last Friday recorded a doji after a recent drawdown.
The stock is now being comforted by the 50 day SMA, and it recently successfully retested a double bottom breakout pivot of $88.56 taken out on March 2. I think it will start building the right side of a cup base and head toward $188 by early 2027, a 90% gain from current prices. Enter at $105 and remain bullish above $84.
Circle was trading around $106 Tuesday.
If recent stabilization holds, this deeply out-of-favor group may finally be laying the groundwork for a more durable upward turn.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 14, 2026 12:07 ET (16:07 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments