My Trading Game Plan Revealed - 12/18/2025: Micron Surge and Low CPI Fuel Santa Claus Rally While S&P Hits Cycle High

In a market that seemed poised on a knife's edge, two major catalysts arrived this morning to potentially shift the short-term narrative. A blockbuster earnings report from Micron and a surprisingly low inflation print have injected a dose of optimism, raising the question of a potential "Santa Claus rally" into year-end. In this morning's My Trading Game Plan, Gareth Soloway, Chief Market Strategist at Verified Investing, broke down how these events are shaping the immediate trading landscape, while simultaneously reminding us to keep our eyes on the bigger, more cautious picture.

This article will expand on the key themes from today's show, exploring the nuance between a short-term float and the longer-term technical structure, the forward-looking strategy of "January Effect" plays, and the critical discipline required to navigate individual stock setups in this dynamic environment.

A Recipe for a Year-End Float?

The AI trade has been under immense pressure. After disappointing reactions to earnings from Oracle and Broadcom, the sector desperately needed a hero. Micron stepped up to the plate. As Gareth noted, the report could have been one of two things: "the final nail in the coffin for the AI trade or a potential bridge to a end of year Santa Claus rally." With the stock soaring nearly 15% in the pre-market, it appears the market is choosing the bridge, at least for now.

Adding fuel to this fire was the November CPI data, which came in significantly better than anticipated. Year-over-year inflation was reported at 2.7%, well below the 3.0% to 3.1% forecast. While the market initially cheered this news with a pop in the S&P 500 futures, Gareth raised a critical question about the data's integrity.

"You can't help but say, is this a real number? Are these fudged numbers?"

This skepticism isn't unfounded political commentary; it's the calculated thinking of a seasoned trader. Gareth pointed out the curious timing: the President delivered a major prime-time speech the night before, celebrating falling prices. The subsequent release of a surprisingly positive inflation number raises questions about perception versus reality. For traders, this means treating the data with a healthy dose of caution. While the market may react positively in the short term, the underlying reality of what consumers are paying for groceries and rent may not align with the headline print, a divergence that could have longer-term consequences.

The Bigger Picture: Respecting the Cycle High

While the combination of Micron's strength and a soft CPI print creates a bullish recipe for the final two weeks of the year—a period notorious for low volume and upward drift—it's crucial not to lose sight of the forest for the trees. The larger timeframes tell a more sobering story.

Looking at the weekly chart of the S&P 500, the recent rally has pushed the index into a major resistance zone that aligns with the 2021 bull market highs. This technical structure suggests a high probability that a significant top is forming. As Gareth clearly stated, "We have to go on the assumption until proven otherwise that this is a cycle high on the markets."

This is a pivotal concept in technical analysis. Markets move in cycles of expansion and contraction, with identifiable pivot highs and lows. Until a confirmed breakout above a prior cycle high occurs, the prevailing assumption must be that the trend is either reversing or entering a prolonged consolidation phase. This doesn't preclude sharp bounces or short-term rallies, but it provides a strategic framework for risk management and position sizing. The current environment could be setting up a classic bull trap, where holiday optimism draws in retail investors just as the larger cycle is preparing to turn down.

Thinking Two Steps Ahead: The January Effect

The mark of a professional trader is the ability to think beyond today's headlines and position for tomorrow's opportunities. While many are focused on a potential Santa Claus rally, Gareth is already building his list for the "January Effect." This phenomenon is a historically reliable pattern driven by year-end tax-loss selling.

Here's how it works: investors holding stocks that have performed poorly throughout the year often sell them before December 31st to realize a capital loss, which can then be used to offset capital gains and reduce their tax burden. This concentrated selling pressure artificially depresses the prices of these beaten-down stocks. Once the calendar flips to January, that selling pressure vanishes, often leading to a sharp "rubber band snapback" rally.

Gareth highlighted two potential candidates:

• FMC Corporation (FMC): Looking at the monthly chart, FMC has experienced a catastrophic decline, falling all the way to support levels dating back to the 2008 financial crisis. This is the kind of capitulation that creates immense opportunity. Gareth noted, "once we get into January, I would assume this would have as much as a 30 to 50% bounce over the next few months."
• Fiserv, Inc. (FISV): This stock has also seen a massive drop, from a high of $240 USD in March 2025 down to major long-term support.

The strategy is not to guess the bottom but to anticipate the cessation of a specific type of selling. "We want to be thinking ahead of the rest of the investing public," Gareth explained. "That puts us in a position to be in the place before all of them buy, which then pushes it up for us." This proactive, logic-based approach is a world away from the reactive, emotional trading that traps most market participants.

Navigating Key Setups in AI and Tech

Micron's explosive move has lifted the entire semiconductor space, but trading it requires precision. After closing yesterday at $225 USD, the stock was trading near $260 USD pre-market. Chasing that kind of gap-up is a low-probability endeavor. Instead, a technician looks for key resistance levels. Gareth identified a clear double top on the chart around the $264 to $265 USD level, marking it as a potential high-probability short for a day trade.

The ripple effect was seen in other beleaguered AI names:

• Broadcom (AVGO): This behemoth has fallen nearly 25% from its highs just a week ago. However, charts rarely move in straight lines. The stock bounced precisely off a technical gap fill level, a textbook example of support. While the next major target to the downside is another gap fill, a relief bounce toward the $350 to $360 USD range is highly probable first.
• Oracle (ORCL): This stock is a perfect example of contrarian analysis. Sentiment is horrendous after a 49% drop, but the chart is screaming for a bounce. It has fallen into a major gap fill level under extremely oversold conditions. "The worse the sentiment, the more I like it," Gareth emphasized. "Always think opposite the crowd." This is where technical analysis provides an edge, allowing traders to buy based on logic when the rest of the market is selling based on fear.

The Discipline of the Retrace: A Tesla Case Study

One of the most valuable lessons from today's show was a masterclass in patient entry, using Tesla as the prime example. Yesterday, Gareth confirmed that Tesla had broken out of a key resistance level, which now flipped to become major support. The common mistake, driven by FOMO (Fear Of Missing Out), is to buy the stock immediately at its highs.

"I'm not going to pay up $100 for a stock in a straight line. I don't want to be the herd," he explained.

The professional approach is to wait for the inevitable retrace to the newly established support. Yesterday, Tesla pulled back perfectly to that level, offering an entry that was $24 USD lower than the breakout high. Those who waited were immediately rewarded with an $11 USD bounce overnight. This simple yet powerful example underscores a core tenet of successful trading: let the trade come to you.

Cycles, Facts, and Probabilities

The analysis of Bitcoin provided a fascinating look at long-term cycles and short-term price action. Zooming out, Gareth highlighted the remarkable consistency of Bitcoin's four-year cycle top: 2017, 2021, and now, potentially, 2025. Interestingly, the peak has occurred one month earlier each cycle, suggesting a three-year, eleven-month pattern.

In the near term, Bitcoin is consolidating in a bearish pattern known as a bear flag. While it's getting a bounce off the lower trendline of the flag, the pattern remains valid until a confirmed breakout occurs. This setup is a classic test of a trader's discipline.

"Our human nature is to assume," Gareth warned. "In trading that gets you in trouble. It makes you do things that position you and reinforce your hopes and dreams… You have to trade the charts. You trade the facts." This is the essence of the Verified Investing methodology: removing hope, fear, and bias, and focusing solely on the probabilities presented by the price action on the chart.

This same fact-based approach applies to precious metals. Gold is consolidating in a bull flag but remains capped by a major double-top resistance. Silver, meanwhile, has broken and successfully retested a key trendline, giving it a potential near-term upside target of $68 to $69 USD.

Conclusion: Navigating with a Clear Game Plan

Today's market is a perfect microcosm of the modern trading environment. We have bullish short-term catalysts like Micron's earnings and a friendly CPI report clashing with a bearish long-term technical structure. Navigating this requires a multi-faceted game plan.

The key takeaways are clear: it's reasonable to expect a potential upward drift into the new year, but this should be viewed as a short-term phenomenon within a larger topping pattern. The real opportunities may lie in thinking ahead, identifying beaten-down "January Effect" candidates that have been discarded by the market.

For active traders, success hinges on discipline. It means identifying precise levels on stocks like Micron and Broadcom rather than chasing headlines. It means having the patience to wait for a retrace, as demonstrated by the Tesla setup, to secure a high-probability entry. And above all, it means trading the objective facts of the chart, not the subjective stories of hope or fear. By adhering to these principles, traders can confidently navigate the opportunities and risks the market presents.