Five Winning Software Stocks

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Wind River Systems (WIND)

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Source: eSignal

Wind River Systems (WIND Quote) bottomed out in late 2002 at $2 following a long bear market decline. The recovery effort topped out two years later near 18, with the stock falling to another multiyear low in March of this year. It's taken off like a rocket since then, almost doubling in price in the last three months.

Look for another rally wave before the stock starts to pull back. That move could lift price into the November swing high at $13.42. A thrust into this level would mark a profitable trade, but longer-term investors should stand aside for now -- the next pullback could fill the large gap between $9 and $10.

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BMC Software (BMC)

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Source: eSignal

BMC Software (BMC Quote) rallied to multiyear high in early 2007 and pulled back in a sharp decline. It returned to this price level 10 months later and sold off once again. A third rally to resistance in May was followed by a strong breakout that lifted price to $41 about three weeks ago.

The stock has been pulling back since and is now less than 2 points from breakout support. This level marks a low-risk entry zone for a strong recovery that takes out the May high and reinstates the strong uptrend. This solid performer should continue to lead the pack through the rest of 2008.