By Doug Busch

A wild finish to the week saw technology surge 4% on Friday, measured by the State Street Technology Select Sector SPDR ETF. The ETF still closed the week in the red however, down 1.9% on its second-largest volume in nearly four years. Technology remains the worst performing of the 11 S&P sectors in 2026, down 2%.

The question now is whether Friday's powerful relief rally is the start of something more meaningful, or simply a classic dead cat bounce?

Software stocks showed signs of potential capitulation last week, with iShares Expanded Tech-Software Sector ETF's weekly volume surging to 165 million shares, by far the largest in history. The ETF printed a bullish harami candle on Friday, advancing 3.5% for its biggest single-day gain in more than nine months. The move may have also confirmed a double bottom near the round $80 level, first tested last April.

But the real action has been the leading semiconductor group, as the VanEck Semiconductor ETF notched its fourth consecutive weekly close above the very round $400 level. All four of those closes were exceptionally tight, within less than 1% of each other. This form of price digestion often precedes powerful moves, particularly when it occurs at all time highs.

Last week brought notable earnings reactions across the semiconductor industry. Teradyne surged 13% on Feb. 3. The stock has posted just 11 weekly declines since April, while climbing an impressive 362%. Other names, including NXP Semiconductors, Qualcomm, and Rambus, were less fortunate, each slipping between 4% and 13% following their reports. Advanced Micro Devices, surprisingly not even among the ETF's 10 largest holdings, fell 17% on Feb. 4. This marked the stock's fourth test of the very round $200 level in three months -- perhaps too much for comfort.

Three additional semiconductor names flirting with key round number levels are catching attention. Here's a technical breakdown of each.

Broadcom, the world's ninth-largest company, is down 4% in 2026 but has gained 48% over the past year. Last week, the stock finished slightly higher, forming a bullish hammer off the $300 level. This follows a drawdown that began with a bearish evening star at the very round $400 level back in mid December.

The stock has shown relative weakness against the group over the past two months, as seen on the ratio chart versus the SMH. However, candlestick patterns have been particularly influential since the big rally from last April, beginning with a bullish engulfing candle on April 7 and culminating in a bearish island reversal at the $400 level with the gap down on Dec.12. Last week, the stock bounced at the very round $300 level and its 200-day simple moving average.

Enter here after today's move above the 21 day exponential moving average at $335, with additional exposure above a double bottom pivot at $359.59. A potential target back toward $400 by mid 2026 implies a 20% gain from current levels. Maintain a bullish stance above $308.

Broadcom was trading at $338 Monday.

Arm Holdings, a U.K.-based semiconductor player, is down 19% over the past three months and 24% over the past year. The stock jumped 17% last week however, recording a bullish engulfing candle on the strongest weekly volume since the first week of August 2024.

On the daily chart, it has underperformed peers since August. Last week's move back toward $100 represented almost a full retracement to the April lows of last year. It also filled a gap from April 22, shortly after back to back bottoming bullish counterattack and engulfing candles on April 7 and 9. Last Wednesday, the stock formed a doji candle, and by Friday it broke above its 21-day exponential moving average.

Enter here, and look to add above a double bottom pivot at $144.35. The stock could gravitate toward $170 in the second half, representing a potential gain of 44% from current levels. Remain bullish above $108.

Arm Holdings was trading around $121 Monday.

Credo Technology Group, a data center connectivity stock, is now 48% off its most recent 52-week high and has declined 10 of the last 14 weeks. Over the past three months, the stock is down more than 30%. Last week, however, it printed a bullish hammer candle on the third-largest weekly volume since coming public, a potential sign of seller exhaustion.

On the daily chart, it has been range bound between the very round $100 and $200 levels since breaking above par last summer. The stock peaked near $200 on Dec. 2, printing a bearish shooting star sandwiched between two doji candles, a clear signal of momentum fatigue. Friday completed a bullish morning star pattern at $100, creating an attractive risk/reward setup on the long side.

Enter here, with additional exposure above a potential double bottom pivot at $164.90 later in the second half. A move toward $175 by year end would represent a gain of 58% from current levels. Remain bullish above $102.

Credo Technology Group was trading around $119 Monday.

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

February 09, 2026 11:15 ET (16:15 GMT)

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