🚨 I’ll be live at with Geof at 9:30 a.m. ET🚨
We are tracking a massive software breakout that could signal exactly where AI is headed next. Plus, we’re breaking down the key morning options setups you need on your radar to capture the momentum early [tap to join us for Profit Panel]
Something’s been happening in the software space that most people missed — and it’s creating one of the cleaner rotation setups I’ve seen in months.
While everyone was piling into chips and declaring software dead thanks to Claude and the AI wave, the market quietly discovered something important: Replacing humans with AI tokens costs about 10 times more than anyone expected.
That changes everything.
Companies rushed to experiment with AI solutions, assuming they could cut software budgets and headcount. But once the token bills started adding up, the economics made it clear that quality software — and the people who build it — still matter.
The idea that AI would erase entire segments of the software market was always a stretch, and now the numbers are proving it.
That realization created a reset in expectations. Instead of software being pushed aside, it’s becoming obvious that the sector overshot to the downside. The sell-off went too far too fast, and now those same names are sitting at levels that look increasingly attractive.
The Names I’m Watching and Why They Look Primed
A handful of software names stand out because they’ve been hammered far more than their fundamentals justify: ServiceNow (NOW), Palo Alto Networks (PANW), UiPath (PATH) and Datadog (DDOG).
These stocks haven’t just dipped — many of them have been driven down to points where sentiment, valuation and positioning are completely disconnected.
When tier-one enterprise software giants get cut in half from their 52-week highs, the market has officially stopped looking at the balance sheet.
That disconnect is exactly what creates opportunity. When quality names get flushed out in a broad rotation, you end up with what I call juice potential — setups where even a modest improvement in sentiment or a shift in flow can drive sharp upside.
Several of these names have been pressed so aggressively that the rebound potential is significantly higher than usual.
Take Microsoft (MSFT). It spent the early summer resetting deeply, giving back its recent highs and washing out to long-term baseline levels not seen since the early part of 2024.
MongoDB (MDB) has been similarly compressed, giving up double-digit chunks of its value in a matter of weeks.
These are not fringe companies. When leaders in the space reset this deeply, the move back up can be powerful once momentum turns.
Even the high-flying relative-strength plays in the space like CrowdStrike (CRWD) — which has stubbornly held near its highs while other SaaS names bled — show that institutional appetite for premium security software hasn’t vanished. The market is just waiting for the right entry point.
But I’m not jumping in blindly. My approach is systematic. I prefer waiting for moving average crossovers — particularly the 62-79 EMA range — to confirm that momentum is actually shifting.
That confirmation often means giving up the first 15-20% of the move, but it dramatically reduces the risk of getting caught in a fake bounce.
In oversold environments, early rallies are common and unreliable. I want evidence of strength, not hope.
We are already starting to see a few names stage aggressive single-day bounces off their major multiyear support lines, but I need those EMAs to flatten out and cross before calling it a structural trend change.
What’s interesting is that flow in these software names is still light. That tells me the rotation is early. Funds aren’t crowding in yet. Retail isn’t rushing back.
These are the conditions where the best setups usually form. Even names like Snowflake (SNOW), which have experienced fierce multimonth volatility, are finally establishing firmer baselines as the bleeding stops.
What This Means Going Into July
As we head into next month, software sits at the top of my focus list along with biotech. Chips look tired, and I don’t see that changing until big tech earnings hit late July.
Right now, we’re watching a real rotation. Money is moving out of overextended semiconductor names and sliding quietly into software.
It isn’t loud. It isn’t euphoric. It’s the kind of steady positioning shift that becomes obvious only in hindsight — after the stocks have already moved.
I’m being patient. I want the technical confirmation because once these names start reclaiming key EMAs and holding them, the real runway opens up.
There’s no need to guess or force entries. The opportunity will still be there when the trend is undeniable.
This is one of those setups where discipline pays more than aggression. Waiting for the right signals can turn a choppy market into a clean trade with conviction behind it.
To better trading,
Alex Reid
WealthPin
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram: https://t.me/+MKMN30kDmVkwMDdh
- YouTube: http://www.youtube.com/@heywealthpin
Important Note: No one from the WealthPin team will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. I’m Pulling Back the Curtain on the Free Ride Scanner Live on Tuesday
If you’ve been missing out on free access to the tool that’s been spearheading some of the market’s biggest winners…
Then sign up now for Tuesday’s free class
If you show up live, you’ll see exactly how to use the Free Ride Scanner, and I’ll hand you free access too!
Sign Up for Tuesday’s Free Class
Disclaimer: We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. Past Performance is not indicative of future results. The testimonials displayed are individual results from some of our top users of the system; user experience may vary.
