By Doug Busch

After a rocky start to the year, two key market segments, private credit and software-related stocks, appear to be finding support at the same time.

Private credit, a major source of financing for software companies and an area that has raised concerns for some banks, seems to be stabilizing. Software stocks are also showing signs of life. If both sectors are indeed bottoming simultaneously, it could provide a meaningful lift to broader market sentiment, signaling that lending conditions are improving and growth-oriented companies are regaining their footing.

To get a broader view of both groups, investors can look to the ETFs that track them. First up is the iShares Expanded Tech-Software Sector ETF. A look at its daily chart shows the fund carving out a bullish inverse head-and-shoulders pattern, with a pivot near $87.50. A decisive break above that level could signal the start of a sustained uptrend, with a potential move toward the very round $100 level, representing roughly 14% upside from current prices by mid-2026. That move would have the ETF catch up in price to its currently downward-sloping 200-day moving average.

Capitulation may have already occurred, as the final week of February and the first week of March delivered a combined 9% gain, each accompanied by the highest weekly volume on record for the fund.

I highlighted this software theme last month, and my conviction remains intact. The bullish case holds as long as the ETF stays above the $83 level. Notice the double bottom from last April continues to hold and Tuesday recorded a bullish inverted hammer candle, and the ratio chart against the State Street Technology Select Sector SPDR ETF is breaking above a downtrend.

The iShares Tech-Expanded Software Sector ETF was trading around $84.75 Wednesday.

To gauge the stress in private credit, investors can monitor the VanEck BDC Income ETF. The fund may have signaled trouble well before it became widely discussed, as it is now down roughly 27% from its highs last February and has since formed a clear pattern of lower highs and lower lows.

A look at the daily chart shows several warning signals along the way. A bearish evening star pattern marked top on July 21, followed by a head-and-shoulders formation in the $14 -- 15 range. The breakdown was reinforced by a bearish engulfing candle on Dec. 11, which also filled an upside gap from early last October.

More recently, however, there are early signs of stabilization. A bullish piercing line candle formed on March 2, and the fund has since established a higher low, offering traders a level to lean against on the long side. If these recent lows hold, it suggests that the stress in private credit may be easing. If not, all bets are off.

The VanEck BDC Income ETF was trading around $13 Wednesday.

BlackRock remains a focal point in the private credit space. Earlier this month, the firm limited redemptions in one of its major funds, raising concerns about liquidity and broader stress in the asset class. The stock is now 20% below its most recent 52-week high and recently recorded a bearish death cross; however, this signal often appears after much of the technical damage has already occurred.

Round-number theory has come into play, with shares bouncing cleanly off the $1,000 level. This was highlighted by a bullish harami candle on Nov. 21 that sparked an 18% rally over the following two months.

More recently, Tuesday's 3% gap higher completed a bullish island reversal, following the sharp 8% gap lower on March 6. Bulls can also point to a bullish counterattack candle on March 9, with those lows successfully retested and holding firm last week. Notice how bearish evening stars marked peaks on Oct. 16 and January 20. Keep an eye on a possible bullish MACD crossover too from well below the zero line which spurted big price gains last April and December.

From a tactical standpoint, entries near $965 could target a move toward $1,100 by mid-2026, representing roughly 13% upside. A sustained move higher may also begin to form the right side of a potential double-bottom base. The bullish case remains intact as long as the stock holds above $930.

BlackRock was trading around $967 Wednesday.

The downturn in software has closely mirrored the strain in private credit, which has been a key source of financing for the sector, and if those lending pressures are beginning to ease, the outlook for both, and the market, may be improving.

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.

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(END) Dow Jones Newswires

March 18, 2026 13:21 ET (17:21 GMT)

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