Software Sector ETF (IGV) on the Verge of a Major Breakout?

By Yogurt · 2026-09-19 · Market Analysis

Software Sector ETF (IGV) on the Verge of a Major Breakout?

While some market sectors are showing signs of weakness, the software sector is painting a much more optimistic picture. After a prolonged period of lagging the broader market, the iShares Expanded Tech-Software Sector ETF (IGV) is now forming a technical pattern that suggests a significant breakout could be on the horizon.

The Underperformance Story

Since October 2025, the IGV has underperformed the S&P 500. While the general market continued to climb, software stocks corrected, creating a noticeable performance gap. However, this could be about to change. The ETF has found a solid bottom around the $73-$75 mark and has since rallied to trade near a critical resistance level.

The Bullish Chart Pattern

Technical analysts are pointing to a classic 'cup and handle' formation on the IGV chart. This bullish pattern is characterized by a rounded bottom (the 'cup') followed by a smaller, secondary downturn (the 'handle'). The top of this pattern has formed a strong resistance line at approximately $110.

The Breakout Scenario

A breakout occurs when the price pushes decisively above this resistance level. Should this happen, the technical target for the move would be calculated by adding the depth of the cup to the breakout point. In this case, it suggests a potential upside of around 33%, a move that would effectively close the performance gap that has formed between IGV and the S&P 500.

Supporting this bullish outlook are two key indicators. First, trading volume has increased significantly as the ETF formed its base, suggesting accumulation by buyers. Second, the 150-day moving average has begun to curve upwards, indicating a shift in the medium-term trend from bearish to bullish.

The Caveat

However, it's crucial to note that the breakout has not yet occurred. The $110 level remains a significant hurdle. Until buyers show a willingness to pay more than this price, the pattern is not confirmed. The key is to wait for the market to validate the setup. If the price can successfully break and hold above $110, it could signal the start of a new period of outperformance for the software sector.