My Trading Game Plan Revealed - 05/13/2026: AI Rally Masks Surging Inflation and 10-Year Yield Risk

The broader markets are caught in a historic tug-of-war between devastating macroeconomic data and an unstoppable artificial intelligence narrative. As inflation metrics print at shockingly high levels, the major indices continue to defy traditional economic gravity, propped up by a single, massive sector. In this morning's My Trading Game Plan show, Gareth Soloway, Chief Market Strategist at VerifiedInvesting.com, broke down the alarming new inflation data, the blatant market reactions to insider information, and the critical technical levels traders must watch as this unprecedented market environment unfolds.

The Inflation Reality Check: PPI Data Shocks the System

The most critical takeaway from today's market action is the absolute surge in inflation, specifically highlighted by the Producer Price Index (PPI) data. While the markets have been hyper-focused on the AI boom, the underlying economic foundation is showing severe cracks.

"The month over month surging to 1.4% versus just a 0.5% forecast. Year over year, 6% now," Gareth noted, highlighting the massive disparity between expectations and reality. Even more concerning is the core data, which strips out volatile food and energy prices. Core PPI came in at 1% month-over-month versus the 0.3% expected, pushing the year-over-year core figure to 5.2%.

To understand the gravity of a 1.4% month-over-month increase, one simply needs to annualize that figure. While it is unlikely to maintain that exact trajectory every single month, the sheer velocity of the price increases at the producer level is a massive red flag.

Understanding the relationship between the PPI and the broader economy is crucial for traders. The PPI represents the inflation that manufacturers and suppliers face in the supply chain. As Gareth explained, "Producers feel it first, then they pass it on to the consumer." This means that the hot Consumer Price Index (CPI) data we saw yesterday is likely just the beginning. When producers are squeezed by higher costs, their only recourse to maintain profit margins is to raise prices for the end consumer. This creates a delayed but inevitable wave of consumer-level inflation that will likely hit the economy in the coming months.

The AI Capex Shield: Masking Economic Stagflation

If the inflation data is so poor, why isn't the broader economy collapsing? The answer lies in the unprecedented capital expenditures (capex) pouring out of mega-cap technology companies.

"If we did not have about a trillion dollars in capex spending from the AI companies… we would be seeing stagflation," Gareth pointed out.

Stagflation—a toxic economic cocktail of stagnant growth and high inflation—is exactly what the average consumer is currently experiencing. However, the estimated $1 trillion in capex from giants like Meta, Alphabet, and Amazon is acting as a massive, localized stimulus package. This spending is artificially propping up employment and economic activity in specific sectors, masking the underlying weakness in the broader economy.

The scale of this single-sector dominance is staggering. The U.S. Gross Domestic Product (GDP) sits at approximately $32 trillion. Currently, the AI and semiconductor stocks make up an estimated $15 to $16 trillion in market capitalization.

"I mean, this is what happens when you have one sector… literally half of US GDP at around $32 trillion, $16 trillion. That is what is going to control the markets, up or down," Gareth emphasized.

When a single sector becomes this heavily weighted, traditional macroeconomic indicators lose their immediate impact on the major indices. We are currently in an environment where the S&P 500 and NASDAQ can brush off the worst inflation data since the post-COVID surge of 2022, simply because the semiconductor space remains bid up.

The Anatomy of an Insider Move

Perhaps the most frustrating element of current market dynamics for retail traders is the blatant asymmetry of information. Yesterday's price action in the semiconductor space provided a textbook example of how elite insiders move markets before the public gets the news.

During the morning session, the semiconductor sector was facing a brutal selloff. Micron was down over 10%, hitting a low at $7.06. Sandisk was down roughly 14% at its lows, dropping to $1,365. Then, precisely at 1:00 p.m. Eastern time, the entire sector violently reversed course.

This wasn't a standard technical bounce or retail "buy the dip" moment. As Gareth highlighted, "The insiders, the elites, started to get the information. They were buying it all afternoon."

It wasn't until 10:00 p.m. that night that the public learned why: news broke that NVIDIA CEO Jensen Huang was unexpectedly traveling to China to meet with President Xi and Trump, sparking hopes of a massive semiconductor trade deal.

The resulting price action was historic. Micron, after being down at $7.06, closed up $60 off that low and is now trading above $800. Sandisk rocketed from its $1,365 low to hit $1,540 in the pre-market before pulling back to $1,493 on the hot PPI data.

This latency of information highlights a critical lesson for traders: you cannot trade the news because, by the time you hear it, the big money has already positioned itself. Instead, traders must rely on technical analysis and chart patterns, which track the footprints of this institutional money in real-time. The massive bottoming tails on the daily charts of these semiconductor stocks yesterday were the technical clues that massive buying volume was stepping in, regardless of the fundamental catalyst.

Bond Markets Flash a Warning Sign

While the equity markets remain entranced by AI, the bond market is telling a much more cautious story. The 10-year Treasury yield is currently bubbling up against a massive technical resistance point at 4.5%.

In technical analysis, when a yield approaches a major resistance level in the face of hot inflation data, it represents a critical tipping point. If the 10-year yield decisively breaks through the 4.5% barrier, it could trigger a repricing of risk assets across the board.

Furthermore, the recent 10-year Treasury auction provided a sobering reality check. The auction was graded a C-minus by economists, indicating weak demand. Buyers demanded higher interest rates to absorb the debt, clearly anticipating that the surging inflation data will force rates to stay higher for longer. The cracks in the foundation are massive, and while the $16 trillion AI market cap is currently papering over them, a sustained breakout in yields could eventually break the market's back.

Technical Setups: Indices, China, and AI Sympathy Plays

Navigating this bifurcated market requires strict adherence to technical levels. Gareth provided several key setups and trendlines to monitor:

S&P 500 and NASDAQ Trendlines

Despite the horrific inflation data, S&P futures remained essentially flat, while the NASDAQ pushed higher. Both indices are currently interacting with critical upper-range trendlines. The S&P 500 tagged a major trendline on Monday, pulling back slightly, while the NASDAQ tagged a trendline connecting the high pivots from 2024 into 2025. Traders must watch these levels closely; a rejection here could signal exhaustion, while a breakout would indicate that the AI momentum trade is entirely ignoring macroeconomic headwinds.

Alibaba and the Chinese Macro Environment

Alibaba reported earnings this morning and traded lower, despite posting relatively solid numbers. The technical chart shows a compelling double bottom and gap fill support level down at $120. However, the fundamental backdrop in China remains bleak. The Chinese housing market has crashed, with property values down 50% to 60%, throwing the consumer into a deep freeze. Until there is a broader economic resolution or a major trade deal, Chinese equities like Alibaba will likely struggle to find sustained momentum, making that $120 support level a critical line in the sand for potential swing trades.

Nebius Group's Breakout

On the other side of the spectrum, AI ancillary plays continue to see massive inflows. Nebius Group (NBIS) surged on earnings, pushing to new all-time highs. When a stock is in price discovery mode at all-time highs, traditional horizontal resistance doesn't exist. Instead, traders must use trendline extensions to find targets. Connecting the previous highs gives a potential resistance target right around the $208 to $210 zone. However, shorting a stock with this much momentum requires extreme caution and strict stop-loss discipline.

Commodities and the Energy Grid Crisis

The commodity space is currently reflecting both the reality of inflation and the hidden costs of the AI revolution.

Oil continues to show incredible strength, hovering around $102 per barrel. It has maintained this elevated level above $100 for two and a half months, driven by sticky inflation and the lack of a geopolitical resolution with Iran. This sustained high energy cost acts as a regressive tax on the consumer, further compounding the stagflationary environment.

In the precious metals market, Gold is trading down slightly, consolidating its recent moves. The chart shows a clear technical support level down around $3,900. Silver, which traditionally acts as a higher-beta, risk-on counterpart to gold, has shown relative strength. Silver recently broke through a critical resistance level at $82, which technically opens the door for a measured move up to the next major resistance zone between $92 and $93.

Perhaps the most fascinating fundamental setup in the commodity space is Natural Gas. Gareth continues to hold a long position in Natural Gas, and the thesis is deeply tied to the AI boom.

The build-out of massive AI data centers is placing an unprecedented strain on the power grid. These facilities require astronomical amounts of electricity and water—with some data centers utilizing up to 30 million gallons of water in short periods just for cooling, severely impacting local municipal water pressure. As the energy grid becomes overwhelmed, Natural Gas stands out as the most viable, relatively cheap, and accessible power source to bridge the gap.

This dynamic is already sparking political debate globally. Politicians in regions like South Korea are proposing taxes on AI companies to subsidize the rising energy costs forced upon everyday citizens. If this narrative takes hold in the United States, it could present a massive regulatory headwind for the AI sector, while simultaneously driving demand for Natural Gas as the primary energy solution.

Bitcoin's Shifting Correlation

Finally, the cryptocurrency market is showing a notable divergence from its historical behavior. Bitcoin remains flat to negative, hovering near major resistance, entirely missing out on the massive semiconductor-led rally.

Historically, Bitcoin has acted as a hyper-leveraged play on tech. Two or three years ago, if the NASDAQ rallied 27% to 30% off its lows, Bitcoin would typically be up 100% or more. Today, Bitcoin is only up roughly the same percentage as the NASDAQ from its recent lows.

This relative weakness indicates a massive shift in capital allocation. The speculative, risk-on money that previously flowed into crypto has been entirely redirected into the semiconductor and AI space. Until Bitcoin can decisively break through its current resistance, it appears the market has crowned a new king of speculative momentum.

Conclusion: Trading the Probabilities in a Distorted Market

We are currently navigating one of the most distorted market environments in modern financial history. On one side, we have surging 6% year-over-year PPI inflation, a 4.5% 10-year Treasury yield, and a consumer base being crushed by stagflation. On the other side, we have a $16 trillion AI sector acting as a localized economic stimulus, driving the major indices higher on the back of insider-driven news events.

For traders, the lesson is clear: you cannot fight the tape, but you also cannot ignore the macroeconomic reality. The AI trade is currently winning, carrying the entire market on its back. However, as Gareth noted, there will eventually be a breaking point.

Success in this environment requires removing emotion, ignoring the delayed news cycle, and focusing entirely on the charts. By respecting technical trendlines on the S&P 500, waiting for high-probability support levels like Alibaba's $120 gap fill, and monitoring critical macro indicators like the 4.5% yield level, traders can navigate this volatility with a distinct mathematical edge. The market will always attempt to shake out the undisciplined; your defense is your adherence to the charts.