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.

Tech stock bludgeoning may be getting extreme

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.

Technology ETFs year-to-date return (as of 2/6/2026)

  • Technology Select Sector SPDR ETF (XLK): -4%
  • iShares Expanded Tech-Software Sector ETF (IGV): -23.9%
  • Roundhill Magnificent Seven ETF (MAGS): -5.8%
  • Invesco QQQ Trust (QQQ): -2.1%

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 iShares Software ETF has crashed 24% year-to-date in 2026.

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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.

Are software stocks bottoming?

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.

5 Worst performing large-cap information technology stocks (past 4 weeks):

  • Applovin (APP): -39%
  • Strategy (MSTR): 36%
  • Atlassian (TEAM): -34%
  • Shopify (SHOP): –34%
  • Intuit (INTU): -33%
    Source: Fidelity Stock Screener

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.”

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It’s been-there, done-that experience like Meisler’s that lets her rise above the noise to make anecdotal observations like that. If the diehard buy-the-dip crowd is quiet, they’re likely nervous, and if they’re nervous, odds are we’re close to a low.

She’s not alone in thinking there may be an opportunity lurking in the wreckage.

“Magnificent Seven stocks were consistently sold on good earnings, and the software sector was a dumpster fire,” wrote longtime trader James DePorre.

“Everything is sold in panic action like this, but then eventually the value buyers will start sifting through the wreckage and find the good names that were unfairly punished,” continued DePorre. “There are signs Friday morning that buyers are starting to nibble at some of the hardest hit names. Bitcoin is finally bouncing, and Nvidia is trading up.”

I’m personally among those bargain hunting, given that I’ve added shares to a number of positions, including IGV, in my trading account.

Indicators are starting to favor bargain hunters

Meisler’s intermediate-term indicator, which measures breadth over 30 days, isn’t oversold. That’s been my favorite tool for signaling market turning points over the past few years.

Related: Analysts revamp Super Micro stock price target after earnings

Still, Meisler sees a number of the technical data points she tracks as shifting in favor of buyers over sellers. Markets don’t necessarily turn on a dime. The more negative sentiment and down days we get from here, the more likely we are to see a tradeable bounce.

Among the indicators Meisler says are starting to work in investors’ favor:

  • Nasdaq Momentum Indicator: Meisler thinks that we could see a turn next week.
  • Nasdaq McClellan Summation Index: Meisler says, “it needs a net differential [up to down volume] of +11 billion shares to halt the decline… The Nasdaq traded 10 billion shares on Thursday, so you can see this is getting extreme. In the past, somewhere around +12 billion was where it got oversold.”
  • Volatility Index: The measure has climbed, and while it isn’t yet extreme, Meisler says it’s “on its way to getting there.”

When could tech stocks bottom out? Overall, Meisler thinks we’re on the cusp of a bounce-back rally.

Todd’s takeaway:

I agree, but be careful. Over my 30-year career, I’ve found that when high beta stocks free-fall, trying to go all-in as they drop is a mistake. Wall Street calls that catching a falling knife for a reason.

While stocks could find their footing, there’s no rule saying they’ll go back up in a straight line. They could roll over and retest the lows once they’re in.

“There are many trapped investors who would love to reduce exposure in names that have recently caused them great pain. Oversold bounces are hard to trust because they quickly run into technical overhead,” said DePorre.

Overall, while nobody rings a bell signaling a bottom, technical indicators are objective. They can help you spot turning points. You won’t nail bottoms, but if you buy dips slowly over time as they start flashing oversold, you can find yourself owning at favorable prices when the tide shifts back to bullish.

“I think we see tech have a short-term oversold rally next week,” concludes Meisler.

Todd Campbell owns shares in IGV, SHOP, TEAM, NVDA, and bitcoin.

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