One of the most valuable traits investors can identify is a stock that continues to show strength even while its sector struggles. Relative strength often signals institutional buying and can be an early indication of future leadership once the broader group begins to recover. Rather than focusing solely on sector performance, it often pays to look for the names quietly outperforming their peers.

A bottom-up investment approach can uncover individual stocks exhibiting exceptional relative strength, identifying the names most likely to lead when the broader group regains momentum. The software sector has struggled recently, the iShares Expanded Tech-Software Sector ETF posted gains in just five trading sessions during June. The fund is now on a four-week losing streak that began with a bearish dark cloud cover candlestick the first week of June, closing 11% below its intraweek high.

The software sector endured a forgettable June, as many of its largest names suffered sharp declines. Oracle was among the hardest hit, tumbling 100 points during the month, including weekly losses of 14% and 19% on well above-average volume. Other large-cap casualties included Microsoft, Palantir, Salesforce, Intuit, and Adobe, all of which fell between 17-20%. Even more striking, MicroStrategy plunged nearly 50%, not a typo.

Against that backdrop, two stocks stood out for all the right reasons. JFrog and Qualys Inc. largely bucked the sector's weakness. Let's examine their technical setups to see whether that resilience can carry into the second half of the year.

JFrog, an application software leader, has more than doubled over the last one year. Since the start of March the stock has been very consistent, declining on a weekly basis just three times. Last week, it jumped 6% on the best weekly volume in at least five years. Over the last month it gained 13% while the IGV fell 12%.

JFrog has displayed impressive relative strength versus its software peers over the past year, as seen on the ratio chart against the IGV. The current advance began with a bullish harami on February 24, which also marked the low of a cup-with-handle base that started with consecutive doji candles on December 10 and 11. The stock broke above the cup-with-handle pivot at $72.16 on May 20, and a bullish golden cross followed a week later.

More recently, JFrog cleared a bull flag trigger at $80 on heavy volume last Friday, reinforcing the strength of the uptrend. Enter here, with an upside target of $110 by late 2026, representing 22% upside from current levels. Remain bullish above $84.

JFrog was trading around $92 Tuesday.

Qualys, a cybersecurity software company, trades 17% below its 52 week high and is on a five session win streak. The stock gained in ten of the last eleven weeks and is up 14% this week and 17% over the last month.

Qualys has outperformed software peers, with the ratio chart against the IGV breaking above a downtrend in March. The current advance began with the completion of a bullish morning star on April 13, when the stock rallied 7% and launched its present uptrend. A few weeks later, the 50-day simple moving average turned higher, reinforcing the improving technical picture. Earlier weakness, including a triple top near $150, with bearish engulfing candles on July 7 and November 12, and a bearish death cross in February, now appears to be firmly in the rearview mirror.

Momentum strengthened further last Friday as it broke above both its 200-day simple moving average and a bull flag, surging more than 6%. It delivered solid follow-through on Monday, and was up 9% in early trading Tuesday. That's an encouraging sign, as the strongest breakouts often work immediately. Enter on a pullback near $135, with an upside target of $165 by year-end, representing 29% upside from current levels. Remain bullish above $115.

Qualys was trading around $138 Tuesday.

Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 30, 2026 15:17 ET (19:17 GMT)

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