Daily Pulse · · 09:00 CET · signal · IGV
A breakout you have to defend is not the same as a bottom you can trust. Software rebounded hard from the April lows and looked to be building a base — but cloud has just broken its rising trendline, and now the broader software ETF and the sector’s bellwethers have to answer.
Software and cloud stocks have reached a critical point. After a strong rebound from the April lows, the sector looked as if it was building a more durable bottom. The latest price action is starting to question that view.
The first warning — cloud breaks its trendline
The key concern comes from the GX Cloud Computing ETF, CLOU, which has now broken below its short-term rising trendline. That does not automatically kill the recovery, but it tells us upside momentum is weakening just as the sector approaches an important resistance zone.
CLOU is back below the $23.60 area after failing to hold its recent breakout attempt. The sharp reversal from the June spike suggests buyers are becoming less aggressive while sellers start to defend the upper part of the range. The Slow Stochastic has also rolled over, adding to the near-term caution.
This makes the next few sessions important. If CLOU cannot quickly reclaim the broken trendline and stabilise above $23.60, the risk is that the April-to-June rebound turns into another failed rally rather than the start of a sustained bottoming process.
IGV is the real test
IGV, the broader software ETF, is also at a key test. Unlike CLOU it still has a more constructive longer-term structure — but it now needs to hold the support zone drawn on the chart. That area in the high-$80s matters because it marks the level where buyers previously stepped in, and where the recent rebound needs to prove itself.
If IGV holds that support and starts to turn higher again, the software bottoming thesis remains alive. If it breaks below the zone, the risk increases that the recent recovery was only a countertrend bounce inside a still-fragile setup.
Crunch time
The message is simple: software is entering crunch time. CLOU has already sent the first warning by breaking its rising trendline. IGV now needs to confirm whether the group can defend support, or whether the bottoming narrative needs to be questioned more seriously.
For now, this is not yet a full bearish breakdown across software — but it is no longer a clean bullish recovery either. The sector needs buyers to show up quickly, especially in IGV. If they do not, the next move could shift from consolidation to renewed downside pressure.
Beneath the surface: the bellwethers split
A look beneath the ETFs confirms the message. Among four key software bellwethers, the split is becoming clear. The two application-software names, Salesforce and ServiceNow, have already broken their short-term upward trendlines — which weakens the case for a clean, sector-wide bottom.
By contrast, the two “tollbooth” infrastructure names, Cloudflare and Datadog, have not yet broken their rising trendlines. They are pulling back, and momentum is cooling, but their uptrends are still technically intact for now.
That makes this an important divergence. If NET and DDOG also lose their trendlines, the software bottoming thesis would come under much greater pressure. But if they hold while IGV defends support, the sector may still have a chance to turn this into a constructive retest rather than a failed rally.
The bottom line
Software is at crunch time. CLOU’s broken trendline is the first warning; IGV’s high-$80s support is the answer the sector now has to give. The cleaner bullish read needs IGV to defend support and the tollbooth names — Cloudflare and Datadog — to keep their uptrends. Lose those, and a “durable bottom” starts to look more like a dead-cat bounce. That is the line I am watching.