Technology stocks have endured a bloodbath of selling as investors have shunned last year’s winners in favor of defense stocks, catching the attention of Wall Street veteran technical analyst Helene Meisler.
The bludgeoning, which has cut the market cap of the biggest tech stocks on the planet — the mag 7 — by a combined $3 trillion, may be about done, says Meisler, whose career stretches back to Cowen & Company in 1982, where she was trained by the legendary technician Justin Mamis.
Meisler isn’t yet pounding the buy-the-dip table, but she did just make a bold call that her indicators will soon hit oversold territory.
“I do think we are heading toward an oversold condition, as I have noted all week. My Overbought/Oversold Oscillator is now finally at the bottom of the page,” said Meisler on February 6.
Meisler has seen plenty of stock market pops and drops over her 40 years on Wall Street, including during her tenure at Goldman Sachs. She’s navigated everything from the savings & loan crisis to the Internet boom/bust, Great Recession, and Covid pandemic.
She uses a number of indicators to objectively analyze market sentiment, searching for potential tops and bottoms, including breadth, which measures the number of rising to falling stocks daily.
The 10-day version of Meisler’s breadth measure shows the Nasdaq is now as oversold as it was last fall, when it put in lows near 22,000. Meisler also points out that Nasdaq trading volume is sending a blunt message.
“Over on Nasdaq, it [downside volume] was 77% and believe it or not, that’s actually a relatively high number for Nasdaq. In the height of the Tariff Tantrum last year, the worst it got to 81% on Nasdaq, so 77% is ‘up there’,” said Meisler in a post on TheStreet Pro.
The hardest hit among technology have been software stocks. Investors woke up this month to the harsh possibility that hundreds of billions of dollars in spending on agentic AI, including AI coding, could render the products they sell unnecessary.
The risk has led to a mass exodus, clearly evidenced by the action in the iShares Expanded Tech-Software Sector ETF (IGV). It peaked near $118 last September. Now it trades below $80.
The worst may be behind software for now, though. Meisler likes to track trader conviction, keeping tabs on what’s said on social media. Many were saying ‘buy the dip’ earlier this week; however, those voices have gone silent.
“The other thing that changed is anecdotally, I did not see anyone quoting the [relative strength index] RSI of IGV, the ETF to be long software stocks, as they were earlier in the week,” said Meisler. “I also did not see anyone, as I had all week, being a hero, saying they will buy the software stocks. It’s a change in tone.”
Written by: Todd Campbell @TheStreet
The post “The 40-year Wall Street analyst explains why tech stocks are due to rally.” first appeared on TheStreet
