Software ETF’s 15% Rally Stalls at 88 Resistance, Datadog Retreats
The iShares Expanded Tech-Software ETF rallied 15% from its Feb.23 low to last week’s peak, lifting Datadog and peers to double-digit gains before stalling at the key 88 Fibonacci resistance level. Renewed selling after Adobe’s earnings miss and CEO succession news has rekindled doubts that AI can lift software valuations.
1. Technical Rebound and Resistance Test
The iShares Expanded Tech-Software ETF climbed about 15% from its February 23 low to reach its high last week, but ran into significant resistance at the 88 Fibonacci retracement level, prompting short sellers to reenter and reverse the rally.
2. Datadog and Peers' Rally Fades
Datadog joined Cloudflare, CrowdStrike, Intuit and Thomson Reuters in posting double-digit gains from the trough, yet most names fell back into negative territory by week’s end, signaling that the bounce may have been a tactical move rather than a sustainable shift in leadership.
3. Adobe Setback Sparks AI Valuation Concerns
Adobe's earnings shortfall and surprise CEO succession announcement weighed heavily on sentiment, pushing the stock down over 25% year-to-date and fueling investor skepticism that AI advancements alone can deliver meaningful price increases or margin expansion for software firms.