My Trading Game Plan Revealed - 12/12/2025: AI Trade Falters, Broadcom Margin Warning Sparks Mega Cap Rotation

In this morning's My Trading Game Plan show, Gareth Soloway, Chief Market Strategist at Verified Investing, delivered a critical analysis that every investor needs to hear: the seemingly unstoppable AI trade may be on the verge of a major shift. With semiconductor giant Broadcom falling after earnings despite strong headline numbers, the market is sending a clear signal about margin pressures and increasing competition. This development, combined with a significant rotation out of mega-cap tech, is creating a complex but opportunity-rich environment for disciplined traders.

The AI Trade's Warning Shot

For months, the narrative surrounding Artificial Intelligence has been one of unbridled growth, propelling stocks like Nvidia to astronomical valuations. However, the market is beginning to look past the hype and focus on a more fundamental metric: margins. Broadcom (AVGO) provided the latest and perhaps most significant piece of evidence.

As Gareth explained, the situation is nuanced. “Broadcom beat earnings, beat revenue, gave good guidance, but margins are starting to see pressure as more competition swells.” This is the crux of the issue. The initial reaction saw Broadcom’s stock rally in the after-hours, only to reverse sharply and fall as institutional investors dissected the report. The culprit? The threat of eroding profitability as more companies enter the chip-making space.

This isn't just about traditional competitors. The landscape is changing rapidly. “Rivian said yesterday, they are going to be creating their own AI chips, all right? More and more companies are creating their own AI chips. That means they're going to be moving away from relying on the Broadcoms, on the Nvidias and all the rest of these, and that will continue to pressure margins.” This trend of vertical integration by major tech consumers represents a long-term headwind for the semiconductor industry’s titans. When a company’s biggest customers start becoming its competitors, investors take notice.

The charts of the AI leaders reflect this growing concern. Nvidia, despite being a market darling, is trading approximately $30 USD off its all-time high after breaking down from a bear flag pattern. Microsoft has pulled back from a high of $554 USD to trade at $482 USD. Meta is showing a clear breakdown pattern. The message is clear: the easy money in the overcrowded AI trade may be a thing of the past.

A Tale of Two Markets: Rotation in Plain Sight

The weakness in mega-cap tech has created a fascinating divergence between the major indices. While the tech-heavy Nasdaq 100 has been struggling, the broader S&P 500 is trading near its all-time highs. Yesterday, the Nasdaq closed down a third of a percent, while the S&P finished the day flat after an initial sell-off and subsequent recovery.

This isn't a sign of broad market weakness, but rather a classic money rotation. “The S&P is very near all-time highs. That is again, a result of money coming out of tech stocks, the Magnificent Seven and moving into other names,” Gareth noted. Fund managers, seeking value and looking to position for the new year, are selling their high-flying tech winners and buying into sectors and stocks that have been left behind.

We are seeing this play out in real-time with names like Lululemon, which saw a huge rally on the back of its earnings report. This is where capital is flowing—away from the crowded trades and into beaten-down quality names. This rotation is likely to be a dominant theme heading into early 2026.

Despite the S&P 500’s strength, its upside potential appears limited in the immediate term. The index is approaching a massive, multi-year resistance trendline that has marked every significant market top. Currently trading around 6900, the index is only about 1% to 1.5% away from this critical barrier. A potential "Santa Claus rally" could push the market toward the psychological 7,000 level, but traders should be acutely aware of the powerful resistance that lies just ahead.

The Probability Playbook in Action

Gareth’s analysis consistently emphasizes a core principle: trading is not about hope or hype; it's a game of probabilities. His approach is to let the charts, data, and technical patterns provide an edge. “The idea is if I can look at charts and I can say, okay, there's a 75% chance this is going to make a move… I just continue to put my money on the 75%. It still means 25% of the time I'll lose, but it means overall out of a hundred trades, a thousand trades, a million trades, the win rate takes you home to what I call the promised land or the profit land.”

Several recent examples from the show illustrate this methodology perfectly:

• Broadcom (AVGO): In yesterday's game plan, Gareth laid out the exact scenario that unfolded. He noted the stock was at major resistance and said, “don't be surprised if initially on earnings, it pops up and then look for a drop back down.” The stock rallied to $424 USD in the after-hours before collapsing, perfectly following the script. Now, with the stock falling, a new high-probability setup is emerging. A beautiful wedge pattern on the daily chart points to major support around the $360 USD level, offering a potential opportunity for a multi-day bounce trade if the price reaches that zone.
• Oracle (ORCL): Another successful call from yesterday’s show. Gareth identified a key technical level for a long trade, which he executed with members of the live day trading room for a "good score." This demonstrates the power of patiently waiting for price to come to a predefined level with a high probability of success.
• Lululemon (LULU): Following its powerful earnings pop, many traders might be tempted to short the initial gap fill around the $206-$207 USD level. However, because that level was filled in the pre-market, Gareth is looking higher. He identified a more significant resistance zone at $225 to $226 USD, an area defined by multiple prior pivot lows that should offer much stronger resistance.

This disciplined, probability-based approach is what separates consistent profitability from gambling. It requires patience, meticulous analysis, and the humility to accept that losses are part of the game.

Grounded Speculation in a Hype-Driven World

In markets, especially commodities and crypto, it's easy to get swept up in wild price predictions. Social media is filled with calls for assets to go to the moon. Technical analysis, however, serves as an anchor, keeping speculation grounded in data and historical precedent.

Gareth's analysis of silver provides a masterclass in this concept. Silver has been a "powerhouse," defying trendlines in a powerful vertical move. This is often driven by retail sentiment, as silver is the most accessible precious metal. “When retail gets involved, you get scenarios like with GameStop in 2021, right? Where it just goes up where it doesn't make sense anymore, but it just keeps going up and going up.”

Instead of guessing at a top, Gareth uses the chart to build a logical case. By creating a parallel channel from a prior trendline, he identifies a potential resistance target around the $67 to $68 USD level. He then adds another layer of analysis, looking at the percentage gains of past vertical moves in silver, which were around 150% to 175%. The current rally from the April low is at about 130%. This historical context suggests the move could extend toward $70 to $71 USD.

This is what educated speculation looks like. It’s not about pulling a number out of thin air. “The key is in technical analysis, we make education, educated analysis bets, right? We say, OK, well, based on facts in the chart and history, what is the likely scenario? And what it does is it keeps us grounded.”

Bitcoin's Ticking Clock

The crypto market is also presenting a clear, chart-based narrative. Bitcoin has been consolidating in what appears to be a bear flag pattern. This pattern allows for short-term bullish trades within the consolidation, but it comes with a warning.

“A bear flag is sideways to up usually, which gives you opportunity to make [it] on the long side. But you have a ticking stop clock. Right. You have to say, OK, this pattern eventually is going down, so I don't want to overstay my welcome.”

The current trajectory points toward a major resistance zone between $98,000 and $100,000 USD. This is the area where the charts suggest a rejection is likely. The exit strategy is just as clear: a trendline connecting the recent lows serves as the trigger. A confirmed break below that line would signal the start of the next major leg down. The chart provides the entry, the target, and the exit, removing emotion and guesswork from the equation.

A Glaring Warning Sign

While markets hover near highs, a key indicator of market sentiment is flashing a warning sign. The Volatility Index (VIX), often called the "fear gauge," is breaking below 15. While a low VIX can persist, historically it signals extreme complacency among investors.

“Once it gets below 15, it's in the warning zone where there's so much complacency that almost anything can be popping up. This freaks people out. They weren't expecting,” Gareth cautioned. In his nearly three-decade career, he has rarely seen the VIX this low. From a strategic perspective, he views any level below 15 as a "great accumulation zone on the VIX," offering a cheap way to hedge against an unexpected market shock.

Conclusion: Navigate with a Chart, Not a Crystal Ball

The current market environment is complex. The AI trade that has lifted the market for over a year is showing signs of fatigue, capital is rotating into new sectors, and complacency is at an extreme. In such a period, navigating with hopes and narratives is a recipe for disaster.

The key takeaways from today's analysis provide a clear path forward. Watch for continued pressure on mega-cap tech, look for opportunities in beaten-down sectors, and pay close attention to the major resistance levels overhead in the S&P 500. Most importantly, let the charts be your guide. By adopting a disciplined, probability-based approach, traders can remove emotion, stay grounded, and position themselves to capitalize on the opportunities that this market rotation will inevitably create.