Software stocks are starting to show strength again. While semiconductors, tracked by the iShares Semiconductor ETF (SOXX), and large-cap tech, tracked by the Technology Select Sector SPDR Fund (XLK), have been rallying for about 10 days, software has lagged. Now, that gap may be closing. The iShares Expanded Tech-Software Sector ETF (IGV) is on pace for its strongest two-day move since last April, with major names like Microsoft (MSFT) and Palantir Technologies (PLTR) helping lead the move.
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New trading tool for QQQ bullsInterestingly, recent price action shows how quickly sentiment has changed. A key level for IGV had been around $76, which had previously held as support in both February and March. However, the ETF briefly fell below that level last week, which looked like a breakdown and suggested further downside. Instead, the move quickly reversed. IGV bounced back above $76 and continued higher, creating what traders call a “bear trap,” where a breakdown pulls in sellers before reversing sharply.
Because of this, the move is seen as a positive signal not just for software, but for the broader market. Up until now, the Nasdaq 100 (QQQ) has been leading the rally mainly due to semiconductors and large tech stocks. However, if software stocks now start to participate, then the rally becomes more balanced. With the S&P 500 (SPY) sitting less than 1% below its record closing high, more participation could help push the market to new highs sooner rather than later.
Is SPY Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on the SPY stock based on 411 Buys, 84 Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SPY price target of $826.51 per share implies 19.1% upside potential.
