Hi everyone,
If you missed this morning's Open Bar, the replay is now live.
My message today was simple: 2026 is shaping up to be a big year for software stocks.
While semiconductors, internet, and other parts of tech carried the market in 2025, software spent most of the year doing nothing.
In fact, with a day and a half left, equal-weight software indexes like XSW are actually negative on the year. When we compare that to VanEck Semiconductors (SMH), which is up roughly 50% in 2025, the performance gap is significant… and even strange at this point.
This kind of divergence doesn't last forever. When leadership is stretched this far, the catch-up trades are the ones I'm most interested in.
On today's show, I walked through what I'm seeing that has me thinking software is finally ready to go — and what I'm watching for confirming evidence.
We reviewed individual names where volatility is compressed and short-term momentum is ticking higher, and we discussed VWAP strategies for entering these trades in the near future.
We also talked about what isn't working right now, the areas where the easy money has likely already been made, and how that capital tends to find its way into the next leadership group.
You can catch the full replay here.
Wishing you all a happy New Year from The Open Bar.
-Steve
