Equity markets have enjoyed a brisk rebound that has carried the Nasdaq 100 back toward its all-time high of 26,182, driven in part by easing geopolitical tensions and an improving index backdrop. The Nasdaq has been outperforming the S&P 500 as the NDX/SPX ratio pushed above a multi-month downtrend channel, a move that has given technical strategists reason to consider a renewed risk-on environment for technology and software stocks.
Paul Ciana, a technical strategist at Bank of America, views the price action from October 2025 through April 2026 as a plausible wave four correction. That interpretation, he argues, could permit a meaningful fifth-wave advance in the Nasdaq through the summer months, with possible upside objectives in the 27,000-28,000 range and an extended target as high as 29,500. Ciana also warned that the speed of the recovery has characteristics consistent with a bull trap or an "X" wave joining two corrective phases, and that a sharp reversal from current levels could shift the market back into an extended correction rather than a new leg higher.
Software has been among the weakest sectors during the recent market decline. The iShares Expanded Tech-Software ETF, IGV, dropped as much as 37% from its September peak to a low near $74 before beginning to stabilize. Momentum indicators including the Relative Strength Index and MACD are beginning to turn higher, and the ETF is attempting to reclaim its 200-week moving average, roughly at $82. Ciana noted there is "no bottom pattern yet," but suggested there is some potential for the ETF to form a head-and-shoulders base as part of a three-wave summer rally toward approximately $95. He also highlighted the risk of a deeper fifth wave pushing IGV down to the $66-63 area.
Below are Ciana's assessments of five prominent software-related names and whether their recent rebounds look like durable lows.
- Oracle - Among the ETF's top holdings, Oracle presents the clearest technical picture. After a roughly 60% decline from its 2025 peak, the stock has held long-term support near $135 and is showing what could be a double-bottom formation. Both RSI and MACD are moving in constructive directions. According to the technical view, a sustained close above $171.76 would confirm the pattern and would open a path toward $207-$215.
- Microsoft - The stock, down about 35% from its highs, is displaying early signs consistent with an oversold recovery, with potential recovery levels in the $413-$430 range. Ciana cautioned that a confirmed bottom for Microsoft has not yet been established.
- Palantir - Palantir is testing a speculative double bottom in the low $120s. For that pattern to be confirmed, an initial rally to roughly $160-$163 would be required. Ciana pointed out that MACD and relative performance metrics still show bearish elements.
- Salesforce - Salesforce appears the most challenged among the group. Trend and relative-strength signals remain broadly unfavorable, even though early RSI divergence has appeared near support around $160.
- Palo Alto Networks - The cybersecurity provider is consolidating around key support levels in the $140s. Momentum is beginning to improve, and if a bottom is confirmed, the technical projection points to potential upside toward $191.
While the recent risk-on environment has improved technical readings across parts of the software complex, the outlook is mixed and dependent on whether nascent reversal patterns hold. The Nasdaq's resilience versus the S&P 500 and a break higher in the NDX/SPX ratio provide a supportive index backdrop, but the rapidity of the rebound raises caution about the possibility of a false breakout that could expose the sector and broader equity market to renewed weakness.
Investors and market observers should therefore weigh the improving momentum signals against the stated downside scenarios for both IGV and several individual names, and monitor whether key confirming closes and follow-through buying materialize in the coming weeks.