Investing.com -- The latest rebound in risk assets has lifted the Nasdaq 100 toward all-time highs, and the improving macro and index backdrop has the potential to also lift the oversold software sector, according to Paul Ciana, Bank of America’s technical strategist.

The Nasdaq 100 has rallied sharply in recent days as geopolitical tensions eased, reclaiming key moving averages and pushing back toward its all-time high of 26,182. The index is also outperforming the S&P 500, with the NDX/SPX ratio breaking higher from a multi-month downtrend channel.

BofA’s Ciana sees a plausible case that the correction running from October 2025 through April 2026 was a wave four pullback, "opening the door to a meaningful fifth-wave advance through the summer months," with upside objectives stretching to the 27,000–28,000 range and potentially as high as 29,500.

"That said, caution is warranted because the speed of the recovery is reminiscent of a bull trap or “X” wave that connects two corrective periods," he noted, adding that a sharp reversal from current levels would raise the risk of an extended correction rather than a new leg higher.

Software has been one of the hardest-hit corners of the equity market. The iShares Expanded Tech-Software ETF, known as IGV, fell as much as 37% from its September peak to a recent low near $74, before beginning to stabilize.

Momentum indicators including RSI and MACD are starting to turn higher, and the ETF is attempting to reclaim its 200-week moving average at around $82.

"No bottom pattern yet, but some potential for a head-and-shoulders base to form as part of a three-wave summer rally to ~$95. Risk is a deeper fifth wave to the $66-63," Ciana said.

He assessed five key software stocks on whether recent rebounds represent durable bottoms.

Among the ETF’s top holdings, Oracle stands out as having the clearest technical setup, the analyst highlighted. After a roughly 60% decline from its 2025 peak, the stock has held long-term support near $135 and is showing a potential double bottom, with RSI and MACD both turning constructive.

A sustained close above $171.76 would confirm the pattern and open the door to a move toward $207–$215, according to Ciana.

Microsoft, down about 35% from its highs, is showing early signs of an oversold recovery toward $413–$430, though a confirmed bottom has yet to emerge.

Palantir, meanwhile, is testing a speculative double bottom in the low $120s, with an initial rally to $160–$163 needed to confirm the pattern, though bearish signals from MACD and relative performance linger, Ciana noted.

Salesforce remains the most challenged of the group, with trend and relative signals still broadly unfavorable despite some early RSI divergence near support at $160.

Palo Alto Networks is consolidating at key support in the $140s with momentum beginning to improve, pointing to potential upside of $191 if a bottom is confirmed, the analyst said.