My Trading Game Plan Revealed - 10/08/2025: Oracle Loss Exposes AI Bub

The seemingly unstoppable Artificial Intelligence narrative hit a major speed bump yesterday, and the shockwaves are just beginning to ripple through the market. In this morning's My Trading Game Plan, Gareth Soloway, Chief Market Strategist at Verified Investing, dissected a bombshell report from Oracle that serves as a critical reality check for investors who believe every AI-related stock is destined for riches. This single piece of news exposes the precariousness of a market priced for perfection and reinforces the importance of following the unvarnished truth of the charts.

The Oracle Bombshell: When AI Hype Meets Financial Reality

The story that kicked off today's analysis centered on tech giant Oracle. After the market closed yesterday, news broke that the company had lost a staggering one hundred million dollars on a data center deal where it was renting NVIDIA chips for AI applications. The reason for the loss was a catastrophic miss on profit margins. As Gareth explained, the numbers are staggering:

“The margins they expected were 70% margins. They came in at 14%. I mean, that's massive. Think about the estimated profit that they would have made on 70% margins versus 14%, huge, huge difference.”

This isn't just a story about one company's miscalculation; it's a crack in the foundation of the entire AI investment thesis. For months, the market has operated under the assumption that the AI revolution would be a tide that lifts all boats—software, data centers, and chip makers alike. Valuations have been stretched to historic levels, with every company even tangentially related to AI being "priced to perfection."

Oracle's experience demonstrates the harsh reality that a rising tide can also hide dangerous rocks. The AI space is capital-intensive, fiercely competitive, and technologically fast-moving. This news should serve as a wake-up call that not every player will be a winner. As Gareth bluntly stated, “There are going to be plenty of losers, but they're all priced as if they're all going to make a massive amount of money. Be very careful. We are in a bubble in AI.”

Adding to this concern is the rapid depreciation of the very infrastructure being built. The top-of-the-line chips being installed in billion-dollar data centers today will be obsolete in as little as three years. This rapid cycle of innovation means companies must continuously reinvest massive sums just to stay relevant, a factor that current valuations may not be fully accounting for.

S&P 500: A Confluence of Technical Warnings

While the fundamental narrative around AI is showing cracks, the technical picture for the broader market is flashing its own warning signs. The S&P 500 futures (ES) chart is exhibiting multiple layers of potential resistance that demand attention.

On an intraday basis, the ES is forming a potential bear flag—a classic continuation pattern that suggests the sell-off from yesterday may not be over. A break below the flag's lower trendline could easily lead to a retest of yesterday's lows and potentially new lows.

Zooming out to the daily chart, the situation becomes even more compelling. The topping tail candle from the previous session remains firmly intact. This bearish reversal signal occurred at a precise intersection of critical trendlines, including the upper boundary of a long-term wedge pattern. When a powerful candlestick pattern forms at a multi-factor resistance zone, the probability of a reversal increases significantly.

Gareth also highlighted an even longer-term trendline that connects the 2021 bull market high with the COVID low and subsequent major market lows. The market has rallied directly into this line and, so far, has been rejected. While any technical level can fail, the presence of three distinct trendlines and a topping tail all converging in the same price zone creates a powerful case for the bears. The odds are now favoring a pullback.

The Nasdaq's Failed Breakout: A Powerful Market Lesson

The tech-heavy Nasdaq 100 (QQQ) presents a slightly different but equally fascinating technical setup. The index recently pushed above a significant long-term trendline and even confirmed the breakout with a daily close above it. In normal circumstances, this would be a bullish signal. However, the price has since fallen back to retest this trendline as support.

This is where one of the most important adages in technical analysis comes into play. As Gareth reminded viewers, “The biggest moves come from failed moves.”

Why is this? The psychology is crucial. When a market breaks above a key resistance level and confirms, two things happen:

Bears Capitulate: Short-sellers who were betting against the market are forced to cover their positions, adding buying pressure. They "throw in the towel."
Breakout Buyers Jump In: Bullish traders and investors see the breakout as a signal to go long, expecting the next major leg up.

If the price then reverses and breaks back below that same level, it creates a perfect storm. The bears who were stopped out may re-initiate their short positions, while the newly trapped breakout buyers are forced to panic-sell to cut their losses. This combination of selling pressure is what fuels powerful, swift moves to the downside. The key level to watch on the QQQ is 603; a confirmed close back below this trendline could trigger just such a move.

A Look Under the Hood: The Magnificent Seven Are Faltering

The weakness isn't just theoretical; it's visible across most of the market's former leaders. While NVIDIA is still holding near its highs within a tightening wedge pattern, many of its Magnificent Seven peers are exhibiting clear bearish patterns:

Meta (META): The head and shoulders pattern has broken down decisively, with the stock falling from nearly $800 USD to $700 USD in just three weeks.
Google (GOOGL): While still near its highs, the stock is trading in a classic channel and is now forming what appears to be a bear flag.
Amazon (AMZN): Gareth described the chart as "nasty." It has broken a key trendline and is also forming a classic bear flag pattern.
Tesla (TSLA): The massive reversal engulfing candle from the previous session is playing out perfectly. After a failed hype-driven rally, the stock fell over 4.45% yesterday, confirming the power of that bearish candlestick pattern.

This widespread deterioration among market leaders suggests that the selling pressure is broad-based and not isolated to a single name. NVIDIA remains the last behemoth standing, and a break of its key support around $181 USD could be the final domino to fall.

Gold's Warning Shot and the Purity of the Charts

While risk assets are showing signs of distress, a traditional safe haven is screaming a warning. Gold has gone vertical, a move that Gareth argues is not a healthy sign for the broader market.

“Is it telling us that really the stock market is healthy when people feel that they need to be in gold massively?” he asked.

This parabolic rally in gold suggests that "big money"—central banks, institutions, and pension funds—is actively seeking shelter. It signals a deep-seated concern about the stability of fiat currencies, global debt levels, and the sustainability of the stock market rally. When investors typically sell gold to buy risk assets during a healthy bull market, the fact that gold is dramatically outperforming the S&P 500 is a significant red flag.

This brings us to the core of Gareth's philosophy. In a world saturated with narratives, hype, and emotional triggers from social media and financial news, the charts offer a refuge of objectivity.

“The charts are so beautiful because they're absolute truth. A chart does not have an agenda… It's the purest form of honesty we have out there. And that's why I use it… doesn't mean it won't be wrong sometimes and I fully accept that.”

This commitment to logic, discipline, and probability is what separates consistently profitable traders from the masses. It's about accepting that you can achieve a high win rate—perhaps 80%—but you will never be 100% right. Success comes from managing risk and letting the mathematical edge play out over time, free from the emotional garbage that derails so many.

Conclusion: Heed the Warnings

The market is at a critical inflection point. The fundamental story driving the bull market—the infallibility of the AI revolution—has been seriously challenged by Oracle's financial reality. Simultaneously, the technical pictures for the S&P 500, the Nasdaq 100, and a majority of the market's most important stocks are flashing clear warning signs. Add in the parabolic flight to safety in gold, and the message becomes difficult to ignore.

Now is the time for caution, discipline, and an unwavering focus on what the charts are telling us. Respect resistance until it is proven otherwise, understand the power of failed patterns, and tune out the noise. The market is providing a clear set of probabilities, and for those willing to listen, it offers a roadmap to navigate the uncertain days ahead.