By Doug Busch
The recent damage across technology, particularly within software, has been severe and difficult to ignore. After three consecutive years of 20%+ gains for the Nasdaq, some degree of retrenchment was inevitable.
But corrections reset excess, they do not eliminate opportunity. In fact, they often create it.
The focus now shifts to identifying high quality names that have reached oversold conditions and are beginning to exhibit tangible technical catalysts. When those elements align and the risk/reward skews favorably, capital should be deployed decisively.
Reddit comes to mind as a name that fits the bill. Approaching its second anniversary as a public company, the stock has shown notable resilience. It has never posted a three-month losing streak and has declined in back to back months only twice since its debut. Unless a sharp rebound materializes before the end of the month, February would mark just the third such occurrence, a testament to how rare sustained weakness has been in this name.
Beyond the technical backdrop, a meaningful fundamental development surfaced this week with a director disclosing a $7.5 million open market purchase, her first insider buy in more than a year. While insiders may sell for a variety of personal or financial reasons, purchases are far more singular in intent, they reflect a belief in future upside. A commitment of this size reinforces confidence in the broader setup.
Now let's examine the technical landscape across both the daily and weekly time frames.
On the daily chart, relative weakness versus the State Street Communication Services Select Sector SPDR ETF has been evident since early January. That fund is heavily influenced by mega cap constituents such as Meta Platforms, Alphabet, and Netflix. However, a constructive development is emerging with RSI making higher lows even as price recently made lower lows, creating a bullish RSI divergence. With RSI now pressed below the 30 level, the stock sits in deeply oversold territory, setting the stage for a potential rally.
Last Thursday the stock filled the gap from the June 16 session, and Friday followed with a 7% surge, its strongest advance since November, forming a bullish hammer. It could very well be putting in a bottom here and should momentum carry into 2027, a larger double bottom formation is beginning to emerge, with a potential pivot at $263.60 within a base that traces back to Sept. 18, a session that registered a bearish shooting star.
Turning to the weekly chart, candlestick signals have repeatedly marked important intermediate term inflection points. Shortly after the company went public in April 2024, a bullish morning star emerged, and the stock proceeded to double into July before a bearish evening star halted the advance. A doji in August 2024 preceded an extraordinary 370% surge, which ultimately gave way to a bearish dark cloud cover in February 2025. That reversal led to a 65% drawdown, bottoming only after a bullish piercing line appeared in April 2025.
Most recently, the stock registered just its second five week losing streak since listing, capped by a doji last week, often adept at signaling potential trend changes from the prevailing direction. The setup presents a favorable risk/reward skew on the long side. Enter on a pullback at $138, targeting $175 by mid-2026, representing 30% upside from current levels. Remain bullish above $125.
Reddit was trading around $140 Tuesday.
With the pullback behind it, Reddit is showing the technical signs of a comeback, setting up a compelling opportunity for patient buyers.
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
February 17, 2026 12:40 ET (17:40 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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