Gareth Soloway: AI Concentration Is Holding the Market Together, But Semiconductor Extremes Are Flashing Warning Signs

The headline coming into the week was geopolitics. Gareth Soloway’s bigger read was market concentration.

After Middle East tensions drove overnight futures volatility, the major indices recovered before the open. On the surface, that looked like resilience. Underneath, the message was more specific: the market is still being held together by AI and semiconductor leadership while breadth remains weak across much of the tape.

That was the core framework from this morning’s My Trading Game Plan. The market is not ignoring risk because everything is healthy. It is absorbing risk because one dominant trade continues to carry the indices. That is where the opportunity is, but it is also where the risk is building.

The Market Recovered From the Headline. That Was the First Signal.

Over the long holiday weekend, futures sold off sharply as traders reacted to escalating Middle East headlines, including renewed concerns around the Strait of Hormuz. At one point, S&P 500 futures were down roughly 1.5%, with Nasdaq futures under even more pressure.

By the time traders returned to their screens, the damage had largely been repaired.

Gareth’s point was not that the headlines were irrelevant. It was that the market’s reaction mattered more than the headline itself. Futures had a clear risk-off move, then recovered before the cash open as the narrative shifted back toward negotiations and de-escalation.

That type of price action tells traders where the real bid is. If a market can absorb a geopolitical shock and still open near flat, the dominant trend has not broken yet. But it also shows how dependent this market has become on narrative control and liquidity momentum.

The headline created the volatility. The recovery showed where traders are still willing to buy.

The Real Risk Is Concentration

The more important issue is not the weekend headline. It is the structure of the market beneath the indices.

Gareth focused on the growing concentration in AI and semiconductor stocks, warning that when one sector represents an outsized share of total U.S. market cap, the broader market becomes more fragile than the index level suggests.

That is the current setup. The major indices still look firm because AI-related names continue to attract capital. But many stocks outside that leadership group are not acting nearly as well. Even within large-cap technology, the strongest action is concentrated in the companies most directly tied to the AI buildout.

That changes the read.

A healthy bull market usually broadens. Leadership rotates. Multiple sectors participate. This market is doing something narrower. It is leaning heavily on one theme, and that means a normal correction in the AI trade could have an outsized impact on the broader indices.

The risk is not that AI strength exists. The risk is that too much of the market now depends on it continuing.

TSM Shows What Happens When Momentum Overrides Structure

Taiwan Semiconductor was one of Gareth’s key examples.

The stock is breaking above a major multi-year trendline that has repeatedly acted as resistance in the past. Gareth noted that most prior tests of that line led to meaningful pullbacks. This time, price is pushing through it at all-time highs.

That does not mean the move has to fail immediately. A breakout is still a breakout until price proves otherwise. But the context matters.

When a stock breaks through a long-standing resistance line after an already extended advance, the move often says more about momentum and FOMO than clean risk/reward. The market is no longer reacting to a fresh discount. It is paying up for exposure to the dominant theme.

That is where disciplined traders separate participation from emotion. A move can continue and still become increasingly dangerous to chase.

Sandisk’s RSI Is the Extreme That Defines the Moment

The strongest technical warning from the show came from Sandisk.

Gareth highlighted the stock’s monthly RSI near 99, a level he said he had never seen in his 27-year career. That is not a normal overbought reading. It is an extreme momentum condition.

RSI above 70 is generally considered overbought. Readings in the 80s are already stretched. A reading near 99 means the stock has experienced almost no meaningful selling pressure across the measured period.

That kind of move can persist longer than logic suggests, especially when the market is locked onto a single theme. But it also creates poor risk/reward for late buyers. The higher price goes without resetting, the more violent the eventual reset can become.

Gareth also pointed to negative divergence on the weekly and daily charts. That matters because price is still pushing higher while momentum is no longer confirming with the same strength. In other words, buyers are still paying higher prices, but the internal force behind the move may be weakening.

That is not an automatic short signal. It is a warning that the easy side of the move may already be behind it.

Micron Has to Clear a Higher Bar

Micron is another example of the same pressure.

The stock was trading near the 1,200 area ahead of its Wednesday post-market earnings report, after rallying sharply into the print. That kind of pre-earnings strength changes the setup because expectations rise with price.

The issue is not whether Micron can report strong numbers. The issue is whether strong numbers are enough.

When a stock rallies aggressively into earnings, the market often prices in a near-perfect result before the report arrives. That means the company may need to beat expectations by a wide margin to extend the move. Anything less can create a sell-the-news reaction, even if the headline numbers look good.

That is the risk Gareth was flagging. The higher the stock runs into the event, the less margin for disappointment remains.

AMAT’s Topping Tails Show Distribution Risk

Applied Materials gave Gareth a cleaner reversal structure to work with.

The stock recently printed three consecutive topping tails. Gareth explained that topping tails often show institutional selling into retail buying. Buyers push price higher during the session, but sellers take control before the close and force price back down.

One topping tail is a warning. Three in a row carries more weight.

The level that matters now is the high of the strongest topping tail, near the $639-$640 area. A daily close above that zone would weaken the bearish signal and show buyers reclaiming control. As long as price remains below it, the topping-tail structure remains intact.

This is where confirmation matters. The candles are not a guarantee of downside, but they show sellers are active into strength. In a sector this extended, that is worth respecting.

Apple Remains a Drag Outside the AI Euphoria

Away from the strongest semiconductor names, Apple’s chart remains much less constructive.

After the company’s WWDC event failed to deliver the AI catalyst the market wanted, Apple sold off and began forming what Gareth described as an “in spirit of” bear flag. The structure is simple: a sharp move lower, followed by a controlled bounce or consolidation that does not repair the damage.

That keeps the bearish setup alive.

Apple still matters because of its weight in the indices. If semiconductor strength keeps lifting the market while Apple remains weak, that is another sign of narrow leadership. The index can hold up, but the internal picture becomes less balanced.

Oil’s Floor Is Not Just Technical

Crude oil also gave traders an important read after the weekend headlines.

Oil spiked above $78 on geopolitical fears, then faded as the market walked back some of the risk premium. Technically, Gareth pointed to a major gap fill below near $67.25. Under normal conditions, that would be a logical support zone to watch.

But this is where the macro context changes the chart.

The U.S. Strategic Petroleum Reserve remains heavily depleted, and Gareth’s view was that the government may not wait for crude to fall all the way into the upper $60s before stepping in to refill supply. That creates a potential demand floor above the clean technical gap-fill level.

The chart may point to $67.25, but the policy backdrop may create support earlier. That is the real takeaway.

Bitcoin Has a Clean Line in the Sand

Bitcoin recovered with broader risk assets, but Gareth’s technical framework remains clear.

The upside level is the prior pivot high near $67,250. Until Bitcoin clears that area, the move is still not a confirmed bullish breakout.

The downside level is more important in the near term. Gareth identified trendline support near $63,200 as the line that needs to hold. A break below that level would likely send Bitcoin back toward the recent double-bottom area, with risk of a deeper breakdown if that support fails.

That creates a clean framework:

Bitcoin remains constructive above the trendline near $63,200. A move above $67,250 improves the bullish case. A daily close below $63,200 changes the structure.

Bottom Line

Gareth’s main message was not that the market is safe because it shook off geopolitical headlines. The message was that the market is still being carried by a narrow AI and semiconductor trade, even as technical extremes continue to build inside that leadership group.

That is the balance traders have to respect.

TSM is breaking through long-term resistance. Sandisk is showing one of the most extreme RSI readings Gareth has ever seen. Micron is heading into earnings with expectations already elevated. AMAT is flashing topping-tail distribution risk. Apple is not confirming the same strength outside the core AI trade.

The market can keep moving higher as long as the leadership holds. But the more concentrated that leadership becomes, the more important the confirmation levels become.

For now, the framework is clear: respect the momentum, but do not ignore the extremes. The risk is not the headline. The risk is what happens if the one trade holding the market together starts to unwind.