By Doug Busch

The software space continues to show signs of fragility, with several large-cap names experiencing meaningful drawdowns. A notable exception has been Palantir, among a select few helping to prop up the iShares Expanded Tech-Software Sector ETF IGV. Still, some names look vulnerable to further downside.

One is Circle internet Group, the financial software player, which appears poised for a deeper pullback. My downside target sits at $135, which would fill the gap from June 13 and mark a retest of the bull flag breakout from June 16, a sensible technical level for buyers to reassess positioning.

Circle internet Group was trading at $148.85 Thursday.

Another software name where the selling may actually be overdone is GitLab, now revisiting the $40 level, which acted as solid support in both April and June. This time, the technical setup looks more encouraging.

Wednesday, the stock completed a bullish morning star pattern (circled), rallying 6% on the strongest daily volume in the past eight weeks. It also closed at the top of its daily range in an encouraging show of relative strength, especially on a day when the broader market wobbled and the iShares Expanded Tech-Software Sector ETF IGV finished flat. I remain constructive above $38.

GitLab was trading at $40.71 Thursday.

Fortinet, prominent in cybersecurity software, is struggling in 2025, down 17% year to date largely due to a harsh 22% post-earnings drop on August 7. That selloff marked the largest single-day percentage decline in the stock's history, with price action finding support at the round $70 level.

Interestingly, this area has been technically significant, acting as resistance several times between 2021 and 2024, following its 142% surge in 2021. Now successfully retested, that level looks poised to flip into support. From a risk/reward perspective, I remain constructive here as long as FTNT holds above $68.

Fortinet was trading at $77.89 Thursday.

AppLovin, a $150B software heavyweight, is up 35% year to date, showing impressive consistency in its trend. Notably, the stock hasn't posted more than a four-week losing streak since Q4 2022. And on Aug. 7 it delivered its seventh straight positive earnings reaction, up 12%.

On the daily chart below, round number theory has played a key role, finding support at $200 in April and facing resistance near $500 in February. The stock successfully retested a double bottom breakout during June and July, and is now revisiting a cup base breakout pivot at $429.09. I expect this level to hold, setting the stage for a potential move back toward $500 by year-end.

AppLovin traded at $437.55 Thursday.

Write to Doug Busch at douglas.busch@barrons.com.

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August 14, 2025 13:22 ET (17:22 GMT)

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