Is it time to go dumpster diving?

That’s not something I typically do. 

I’m a trend follower. I like to buy stocks that are already in uptrends. Ideally, I’m buying leaders—i.e., the strongest stocks on the planet. 

But occasionally, I turn my attention to beaten-down names. That’s what this issue is all about…  

Have you seen what’s been happening with software stocks? They’ve been getting smoked.

The iShares Expanded Tech-Software Sector ETF (IGV) is down 17% since the start of the year. And artificial intelligence (AI) is a big reason why…

Anthropic—the AI company behind Claude—is a major driver of the selling pressure.

It’s been rolling out a wave of new upgrades and tolls that can handle real work—writing code, answering customer questions, and even replacing parts of what many software tools do today.

That’s a direct threat to software companies’ pricing power and long-term growth. If AI can bundle these features into one platform, a lot of standalone tools suddenly look less essential.

So, many investors cut bait—and money has been rotating out of software names.

But the worst may now be over. Take a look at this chart. It shows the recent performance of IGV. 

Notice how IGV has stopped falling? That’s the first step in the beginning of a new uptrend.

We can also see a huge uptick in trading volume since February. That tells us that a lot of shares  have traded hands. It may even indicate capitulation—i.e., software stocks putting in a major bottom.

Software also looks just as good when we zoom out.

Here, we’re looking at a monthly chart of IGV. We can see it’s holding the uptrend that’s been in place since 2009. That’s an excellent sign. 

So… how do we make the most of this opportunity?

Most folks would do just fine by picking up IGV at these discounted prices. But we can do better. I suggest identifying software stocks that are displaying major strength relative to their peers.

We’ve already added a couple of these leaders in my RiskHedge Live trading room.

One is helping power faster, more reliable content delivery across the internet… and the other provides cloud infrastructure developers need to build and scale modern applications.

If you want to see exactly what we’re buying—and get my next trades in real time—you can join us in RiskHedge Live here.

Justin Spittler Chief Trader, RiskHedge