Software stocks continue to lead the technology sector, though hardware names like Dell Technologies and HP Inc. are providing fierce competition, especially after a very well-received earnings reaction.
The iShares Expanded Tech-Software ETF on Thursday recaptured its $106.85 cup-with-handle pivot. This followed Wednesday's price action that filled the gap from Aug. 26. On Aug. 27, the ETF gapped up 8% driven by 20% earnings-fueled surges in Salesforce, Okta, and CrowdStrike.
AI cloud provider Nebius Group stands out as a candidate deserving close attention at current prices.
It has lagged software peers on the ratio chart against the IGV ETF since July, which marked the conclusion of a nice uptrend dating to March. Round number theory came into play with a rejection at the $300 level in mid-June, marked by a bearish shooting star and spinning top candle.
Nebius recorded a bullish engulfing candle on Wednesday at $200. Note the doji the day prior, as well as on Aug. 24 and Aug. 26, suggesting selling pressure is abating and the stock could be bottoming. Other bullish factors include the gap fill from the Aug. 11 session, the day before a 34% earnings-related advance. Note how volume has tailed off in recent weeks since the Aug. 13 doji, following an 80-point decline.
I would buy this on strength above $210, north of its 50 day simple moving average. Then it could focus on recapturing the bullish inverse head and shoulders breakout pivot near $225. I think this could get back toward $300 by year end, a 46% gain from current prices. Remain bullish above $194. Nebius Group was trading around $208 Thursday.
The weekly chart highlights the stock's dominant uptrend since late 2024, characterized by remarkable resilience as it hasn't suffered a losing streak longer than three weeks in this entire period. During this run, the stock consistently forms clean cup bases, beginning with its first consolidation in early 2025.
A second base structure kicked off with a bearish evening star in October 2025. After carving out three dojis at the bottom, the stock staged a powerful 33% breakout during the week ending April 10. That move was validated the week ending July 31, when the stock successfully retested that move at its 50-week simple moving average and staged a massive $45 intraweek reversal.
A third cup base now appears to be under construction, starting from late June's 16% slump off a $300 bearish engulfing pattern. Recent weekly candles show a dark cloud cover followed by last week's doji, signaling ongoing consolidation. If this pattern matures like the previous ones, the chart projects a potential target of $455 by late 2027 or early 2028.
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.
Comments