My Trading Game Plan Revealed - 11/13/2025: Fed Hawkish Shift and AI Hype Signal 10% Market Correction

The market narrative is shifting. After a brief relief rally on news of the government reopening, investors are now confronting a more hawkish Federal Reserve and growing concerns about the sustainability of the AI-driven market rally. In this morning's My Trading Game Plan show, Gareth Soloway, Chief Market Strategist at Verified Investing, laid out a compelling, data-driven case for an impending market correction, highlighting critical warning signs in the semiconductor space and identifying key levels across major indices and individual stocks.

Today, we’ll dive deeper into the confluence of factors signaling a potential market top, from Fed policy shifts to the troubling fundamentals behind the AI hype, and explore the specific technical setups that could define the trading landscape in the weeks ahead.

The Fed Pushes Back, The Market Wakes Up

For weeks, a disconnect has existed between the market's expectations and the Federal Reserve's rhetoric. While Fed officials remained cautious, the market priced in a high probability of a December interest rate cut. That dynamic is now changing rapidly. As Gareth noted this morning, the message from the Fed is becoming impossible to ignore.

“We're hearing from more Fed officials that they do not think a rate cut is warranted in December… The odds after the last Fed rate cut were about 75% that we'd get one in December. We've now moved to a 50-50 coin flip for a rate cut in December.”

This repricing is having a tangible effect, with the 10-year Treasury yield moving higher in response. The market's initial rally on Monday, fueled by the government reopening, has faded as this new reality sets in. The focus has shifted from short-term political resolutions to the more significant, underlying risks that have been building for months—risks that Gareth has been consistently highlighting.

This shift underscores a critical lesson for traders: markets often price in good news quickly and then move on to the next major catalyst. The government reopening was a known event, and its positive impact was likely exhausted in Monday's rally. Now, the market must grapple with the less comfortable truths of persistent inflation, a stubborn Fed, and stretched valuations in key sectors.

Unpacking the AI Hype: A Bubble in the Making?

The driving force behind this year's market rally has been the explosive growth and investor enthusiasm surrounding artificial intelligence. However, a closer look at the fundamentals reveals a potentially precarious situation. The narrative of infinite growth is beginning to clash with the realities of infrastructure, finance, and accounting.

Gareth pointed to several red flags:

1. The Power Problem: Data center construction is reportedly being halted in some areas due to a lack of available power sources. The immense energy required to run these AI-focused facilities presents a physical bottleneck to growth that the market has largely ignored.
2. Questionable Capital: OpenAI has publicly discussed spending a staggering $1.4 trillion in the coming years, yet the company is consistently losing money and has no clear path to securing such funding. This highlights a speculative fervor where grand plans are divorced from financial reality.
3. Aggressive Accounting: Perhaps the most alarming issue is the accounting practices of the AI "hyperscalers." These companies are depreciating the chips they purchase over a seven-year period. In reality, these chips lose an estimated 90% of their value within the first two years. This practice artificially inflates current earnings by understating expenses, creating a distorted picture of profitability that could unravel quickly.

These fundamental issues provide a crucial backdrop to the technical warnings flashing in the charts. They suggest that the AI trade is not just over-extended from a price perspective but is also built on a foundation that may be less stable than the market believes.

Charting a 10% Correction

With the fundamental picture looking increasingly shaky, the technicals are aligning to signal a probable downturn. Gareth's analysis of the major indices points towards a healthy but significant correction on the horizon.

On the S&P 500, the price action is showing signs of weakness. The futures market is testing the lows from the previous session, a development that could foreshadow increased volatility. Looking at the weekly chart, Gareth remains steadfast in his belief that a near-term top is in place.

His target for a pullback is the 6,140 to 6,150 zone. This isn't an arbitrary number; it corresponds with the major high established before the "liberation tariff sell-off," making it a logical area for the market to revisit. A move to this level would represent a roughly 10% correction from current prices. This type of pullback is not a crash but a standard, run-of-the-mill correction that serves to reset sentiment and valuations after a monstrous, near-vertical ascent.

The Nasdaq 100, tracked by the QQQ ETF, tells a similar story. The index is pressed up against a critical parallel resistance line that has capped rallies multiple times since May. A confirmed breakdown below this trendline would open the door for its own 10% correction, which would target the 550 level. Given that the top 10 mega-cap tech stocks comprise 50% of the Nasdaq 100's weighting, a correction in this index would be a direct reflection of a pullback in the market's biggest leaders.

The Semiconductor Canary in the Coal Mine

If the AI trade is the engine of the market, then the semiconductor sector is its fuel. That's why the chart of the SMH (the semiconductor ETF) is perhaps the most important leading indicator right now. Gareth presented a purely data-driven analysis that strips away the hype and focuses on historical precedent.

“While everyone else is all about the hype, I always look and say, okay, the hype is one thing. Now let me confirm, is that hype warranted based on technical analysis? And right now it's not.”

The data is stark. Three times in recent years, the SMH has reached an extension of 102% above its 200-week moving average.

• In 2021, it hit this level and proceeded to correct by 45%.
• In 2024, it hit this level again and corrected by 40%.
• Just a few weeks ago, it hit 102% above the 200-week moving average for the third time.

History doesn't repeat exactly, but it often rhymes. This pattern suggests that the semiconductor sector is stretched to a historical breaking point. Compounding this technical warning is a sentiment indicator: last week saw the largest-ever inflows into the SMH. In trading, when the crowd rushes in with maximum enthusiasm at a point of extreme technical extension, it is often a powerful signal that a top is near.

High-Probability Setups: Identifying the Shorts and Bounces

In a market poised for a correction, opportunities arise on both the long and short sides. Gareth detailed several compelling setups that traders should be watching.

Potential Shorts:

• NVIDIA (NVDA): The undisputed leader of the AI trade is showing signs of cracking, with the stock cratering in pre-market trading. It is hammering on a key support trendline for what would be the sixth time. As Gareth explained, the more a support level is tested, the weaker it becomes. He places the odds of a breakdown at approximately 70% on the next test.
• CrowdStrike (CRWD): Gareth initiated a short position in this name as it ran directly into a multi-year, up-sloping resistance trendline. He offered a masterclass in trendline psychology: with an up-sloping line, each successive hit occurs at a higher price, making the stock more overbought and increasing the probability of a pullback.
• Cisco (CSCO): In what could be an "epic short" and an "ominous warning sign" for the broader market, Cisco is approaching its all-time high of around $82 USD from the dot-com bubble peak in 2000. A failure at this level would constitute a massive double top spanning a quarter of a century.
• Sandisk (SNDK): Described as "ridiculously overbought," this stock has gone vertical. Gareth uses a powerful analogy: “It stretches the rubber band until it snaps. The further it stretches, the harder it snaps back.” A first stop for a correction would be the gap fill around the $239-$240 USD level, with an eventual move back below $200 USD looking probable.

Potential Bounces:

Even in a corrective environment, panic creates opportunity. Several beaten-down names are approaching key support levels where swing traders can look for bounce plays.

• Oracle (ORCL): This stock serves as a warning sign for the AI space, having collapsed since its massive post-earnings surge. However, it is now approaching major support zones where a technical bounce is becoming likely.
• Circle (CRCL): A gap fill is approaching at approximately $83 USD. Gap fills are high-probability levels for technical bounces, making this a clear level to watch.
• MicroStrategy (MSTR): While the chart looks "not good" after breaking key support, a flush-out could present a prime buying opportunity for a swing trade. Gareth is targeting the $180-$185 USD zone, an area of significant historical pivot points that should act as major support.

The Agnostic Trader's Mindset

Ultimately, navigating a complex market environment requires a disciplined, unemotional, and agnostic approach. It’s not about falling in love with a story or a company; it's about identifying probabilities and executing based on what the charts are saying. Gareth's closing thoughts perfectly captured this professional mindset.

“Remember, be agnostic in trading. We don't care about any company. We just want to make money, long or short. I'm a moneymaker. Let's do it.”

This philosophy is the key to longevity. Whether the market is in a roaring bull phase or a corrective downturn, there are always opportunities. By shorting over-extended, vertical moves and buying panic-driven flushes into major support, traders can profit in any environment.

The evidence is mounting for a market correction. A hawkish Fed, cracks in the AI narrative, and multiple technical and historical warning signs are all pointing in the same direction. By staying focused on the data, respecting key chart levels, and maintaining an agnostic mindset, traders can prepare to navigate the volatility and capitalize on the high-probability opportunities that are sure to emerge.