Time for (Selective) Caution in Tech. 3 Stocks with Bearish Charts. — Barrons.com

By Doug Busch

Technology may still be in a bull market, but the wealth isn't shared equally. Several widely held tech stocks have failed to keep pace with the group's rally, a divergence investors should treat with caution. In a market where leadership is increasingly concentrated, persistent underperformance can signal deeper issues. Technicians often believe poor-performing stocks are weak for a reason and that once a downtrend is in place, it is likely to remain in place. At the very least, laggards in an otherwise robust sector deserve closer scrutiny before investors assume they'll revert to the mean and rebound with the rest of tech.

Take software, the only subsector in technology that is lower over the last three months. The iShares Expanded Tech-Software Sector ETF is down 1% over the last year against the VanEck Semiconductor ETF, which has advanced 47%. Not all software stocks are dropping, as standout performers AppLovin, MongoDB, and CrowdStrike Holdings have each rallied more than 20% over the last three months, highlighting how uneven the group has become. In contrast, names such as Synopsys, HubSpot, Nutanix, and Strategy Inc. have slipped 20% to 50% each.

One name that appears on shaky footing is Veeva Systems, a cloud-based software company focused on healthcare. The stock is down 3% over the past year and has dropped 18% in just the last month. Technically, it completed a bearish island reversal on Nov. 21, gapping down 10% after earnings. Round-number theory has been notable as well, with a clean bounce off $200 on April 7 and a spinning-top candle at $300 on Oct. 7 that helped usher in the current drawdown. The ratio chart, which shows how one stock is performing relative to another stock, sector, or index, has weakened sharply against peers during November. This can be considered a concerning development as software names that can't hold their own within the group often see additional downside. Veeva Systems has now formed a bear flag, failing to mount any meaningful rebound after its harsh earnings reaction. A break below $237 would trigger a sell signal.

Veeva Systems was trading around $234 Monday.

DoorDash Inc. is up 34% year to date but now trades 21% below its recent 52-week high. The weakness traces back to a failed breakout above a cup-base pivot at $278.25, marked by a bearish dark-cloud-cover pattern on Oct. 7. This was followed by doji and bearish-engulfing candles on Oct. 15 and Oct. 16, respectively. The best breakouts tend to work immediately, so that hesitation was a red flag. I believe this can be sold into the upside gap fill from the Nov. 5 session, which preceded the stock's sharp 17% post-earnings drop the following day. Astute investors may have also noticed that DoorDash was already lagging the broader market: it broke below an uptrend on its ratio chart versus the major indexes in early October, about a month before the stock itself rolled over.

DoorDash was trading around $221.50 Monday.

HP Inc. is down 7% year to date and trades 30% below its recent 52-week high, even as the Nasdaq sits just 2% off the all-time high. A recent three-week rally, corresponding to gains of 17%, may be losing steam, as volume was soft during the four-day winning streak that closed last week. The stock is now approaching a wall of resistance at its 50- and 200-day simple moving averages. Both are sloping lower, with the 200-day line having acted as resistance in January, February, October, and November. Given these technical factors, HP could drift back toward the $22.50 area by early 2026, representing a roughly 13% decline from current levels.

HP was trading around $25.25 Monday.

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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