INFLATION SHOCK: Hot PPI Data! AI Bubble (SMCI, ORCL) + S&P 500 Trend Change

[00:00:00] Speaker 1: My name is Gareth Soloway and I was a losing trader until I mastered technical analysis. Logic and charts beat hype and narratives every time. Now I teach investors the same techniques that made me a multimillionaire. This is my trading game plan. Good morning, everybody. Welcome to my trading game plan. My name is Gareth Soloway, Chief Market Strategist here. Now in today's game plan, we've got to dive into not only the macro data, but also what the charts are telling us because we did see a lower low close yesterday, which is something we talked about needing to see to kind of put another nail in the coffin on the market in the near term. So we're going to look at that, see exactly what that means. What's the last nail that needs to form? I'm going to reveal that. We're also going to talk about Oracle, Oracle falling sharply on earnings. Obviously, the straight of Hormuz where we're seeing continued escalation, but oil is down. Why is that happening? And then of course, we'll go into other factors like the CPI. In fact, let's start with the CPI today. Excuse me, PPI today, producer price index. It came in hotter than expected. The headline year over year, 6.5% inflation versus 6.4%, that which is what the market had forecast. And then month over month was very hot. 1.1% increase in producer price prices versus a 0.7% increase. Now, what's scary about this folks is that what we know is that prices rise for the producers or the businesses first, and then they pass it along down the line to the consumer. So anytime you see hot numbers on PPI, you have to assume that within a few months that's going to translate into hot numbers in the CPI data. So we're going to watch for that and see how it plays out. But needless to say, not good, good concepts or ideas on prices here or data on the inflation side. We'll see where things go from here. Now, the markets overall are slightly positive on the day. If we look at the S&P futures here, you can see overnight as oil fell, we saw the futures floating up, up, up, up, up. Then we got the PPI data, which did drop the futures right here, but we've even bounced back just a little bit. And again, let's be fair. Markets care very little about oil right now. It continues to be the AI trade. What is going on with the AI trade? What's going on with SpaceX, which will be live and trading tomorrow, probably around the midday or early afternoon period. And again, that will be an epic event overall. All right. So let's go into the charts. Talk the S&P 500 daily chart real quick. Here we have it. Yesterday, the S&P dropping 1.62%. The big factor for today or yesterday was that we finally got a lower low close. So if we look at this, we had this big move up here, sideways action. Big move up there, slight downside move. Big move up, big downside move, right? So you could see how it was escalating. Here was flat. Here was a small pullback. Here's a big pullback. That's very much how markets work. And it shows you that the public or the investing players or even the institutions were getting more sell side action on every pullback. Meaning they were getting a little bit more nervous about the overall market. Now, two days ago, we had this wick or this tail right here, which put in a lower low versus this low, right? But it wasn't a daily closing lower low. All right. I said yesterday, this is step one, right? This is making a lower low, but then they saved the market. Yesterday, we got number two. We have our low and we have our daily closing low below that point. So this would be the second nail in the coffin. The first nail was the tail down there making a lower low. What is the last factor which will push the odds? So right now, when you have a tail that makes a lower low, 60% odds that you have a major market top. Once you get a daily closing lower low, now you have about a 70% chance that there's a major high being put in. The last factor that will drive the odds or probabilities to 80% is we need to see a bounce in the market. Now, that sounds weird, right? We need to see a bounce. Yes, you need to see a bounce and you want to see a lower high. We don't have a lower high yet. That's the one missing component from a technical perspective that is keeping the market from really solidifying this as a top. So you need to see a little bit of a bounce and we need to see a high being put in and then another leg to the downside. Once we get a lower low with a lower high, that is a change in direction in the market. And that would, to me, solidify this as a major potential cycle top for the market. It's interesting that it is all coinciding with the SpaceX IPO. And obviously we have Anthropic and OpenAI coming down the pike. All of these factors, again, lots of additional money being thrown in. Or I shouldn't say money. It's actually liquidity sucking shares that are going to be thrown at the market. Now, having said that, we're seeing all of these companies out there. We're not talking the IPOs. We're talking about SMCI, Google, and now even Oracle. They're all saying they're going to be dumping money on the open market or shares on the open market to raise capital. So yesterday, we saw this massive decline in SMCI. I mean, look at this drop here, folks. 28% yesterday. The stock was literally at 51. It's now at $29 per share. That was just about a week ago. So massive decline there. And this was after the company came out and said they were going to sell $7 billion in stock to raise capital. Now, again, why is that a big deal? Well, the market cap of SMCI, and I'm just looking at it on one of my other screens, was only about $21 billion. So the decline or the amount of shares, they're basically diluting shareholders by 30%. That's massive. A massive dilution to shareholders. Obviously, the stock price reflecting that with this big drawdown. Now, we also heard recently from Google, right? Google said they were going to dump about $80 billion on stock, right? And that's we've seen Google come in here. Now, I am watching Google on a potential swing trade basis for this gap fill. But again, notice how these companies are all piling in to raise capital ahead of all these big IPOs. Because they know that the liquidity is going to essentially it's going to suck up the liquidity when you come to market with a $1.8 trillion company like SpaceX, then Anthropic, which is probably about a trillion dollars, all of these factors. So again, the companies, it's this massive rush for money from these companies. And in fact, we saw Oracle. Oracle announced that they were going to be raising $40 billion. $20 billion of that will come from share sales to dilute shareholders as well. And we know that Oracle already is not cash flow positive anymore because of the amount of debt they've taken on. So the stock on Oracle, you can see again, after earnings, it collapsed last night. It's bounced a little bit here. But again, it is down sharply. And that again is a negative. There will be a technical day trading level on this that I'm going to be watching right here at the 172 pierce right there. There's a gap fill. In fact, if you stretch that trend line out, look at where it goes. It goes right to this high pivot as well. So this will be a very intriguing potential day trading level for me today on Oracle. What about a swing trade? Where would I go near a swing trade? First level I would even consider is I would take these trend lines. [00:07:55] Speaker ?: Look at this. [00:07:55] Speaker 1: If we draw this trend line out, that trend line down there. So as a swing trade, I'm looking at like 135 to 140, way farther lower. Now you might say, well, why so much for the lower? Well, because number one, it looks like the bubble is breaking on the A.I. trade. Number two, Oracle has put itself in a position where literally their survival might be at risk if they don't make a lot of money on all of the deals that they're doing. They are raising so much capital, taking on so much debt that if there's any sort of hiccup in this A.I. trade, which inevitably there probably will be, you could be looking at Oracle and saying, wow, are they even going to survive with all this debt? How are they going to pay off these these amounts of paper that they've accumulated? So, you know, again, that's why for me, I'm going to wait for a swing trade until much, much lower. Maybe it never gets there. Maybe. But you know what? I'd rather play it safe. All right. So we'll go into a few other stocks. I have a few other key swing trade levels I want to talk to you guys about. But before we do that, let's talk about the latest in the Iran-U.S. conflict. So we saw the U.S. striking Iran again, vice versa strikes coming back. It seems like, again, there's no right now we're not close to a peace deal or a even a ceasefire. I mean, there is a supposed ceasefire, but obviously it means nothing as both sides are firing on each other. But this is the kicker. You might say, well, if that's the case, why is oil trading down today? If we look at the crude oil chart, it's actually trading down about 1.7% today. So if things are escalating, why is oil down? And my only thesis or theory on this is that the president of the U.S. is starting to realize that this kind of soft gloved approach is not pushing Iran to make a deal. They're just like, hey, listen, we know the midterms are coming up. We'll wait. We think we'll get a better deal if we just sit back. OK, so the president now is saying, all right, well, we're going to start striking you guys more to try to push to make a deal. And maybe that is what gets a deal done. I think that could be a reason why the markets are now pricing in a little bit of lower oil. Now, if it escalates even further, maybe oil goes back up. But right now, again, it is intriguing to see that oil prices are down today on the day. All right. Overall, what's the chart telling us? Just like yesterday, we broke out of this wedge to the downside. This is sideways chop. Eventually, I would expect further downside in oil. That's what the charts tell us is the most likely outcome. Now, listen, it's not a it's not an 80% chance, but I would say about 65, 70% chance based on this chart pattern that oil will head down further down the line. Doesn't mean it can't pop in the near term, but down the line further. Now, looking at the 10 year yield, 10 year yields are down a little bit. That makes sense. When oil goes down, we've seen the 10 year yield go down just a bit. I am keeping an eye on a trend line here. If we take a look, we have this trend line right through here. Look at this beauty right here that I found is that you take this high pivot going back to January of 2025. This high pivot here from March of 2026. This secondary high pivot from May and then we broke out. We retraced and this is now the support line. So right now we're still above this level. As long as we stay above this level, yields could go higher, especially if the US economy, again, the part that's strong because a huge amount is probably in a recession already. But as long as we see job gains and the market believes there are actually job gains, then yields will stay up, especially as long as oil is staying up around $90 a barrel. All right, so let's move on now here. A couple other ideas for swing trades that I am watching personally. You have a gap fill on Amazon coming up around 233. That should be a technical level to watch. We talked about Google, Google here slash alphabet right at this gap fill as well. So these are just some ideas of high quality names that have pulled back that are coming into major technical support. Now we are seeing the AI trade bounce today. If we look at Micron, which you could argue is probably the poster child for the AI trade right now. This or Sandisk both are very, very strong. Micron opening pre-market much, much higher. It has faded, but it's still up sizably from yesterday. Yesterday in the overnight, or I should say in the late evening, markets were getting hammered as oil was up to $93 a barrel and Micron was down to about 866. It's back above 900 near 910 today. Now on a chart basis, this is what I'm watching guys. We have a big move up. We have a pullback. And now are we doing this type of pattern? If you've been with me for more than a couple of weeks, you should know what that pattern is. Down move, inside bar. What kind of pattern is that? Generally bearish. Now, listen, if we take out this high, then that's off the table. The bearish pattern fails. It's just simple, simple probabilities. But right now this sideways chop could be setting up for another leg lower on the price of Micron. All right, so we'll keep an eye on that. Apple yesterday, I said, was due for a bounce off this key level. It was perfect. I said $87 to $88. It flushed early and bounced when it went as high as almost 95. And is again pulled back a little with the markets yesterday. But you could see that support level. Now, this level I actually think is going to end up getting broken. So this to me is just a short term kind of like this. And then I think it falls again to the downside. Now looking at gold and silver. Wow. So I told you guys that gold, and this was when gold was near 5,000, 4,700, whatever. I said, it's going to 4,100. And then you probably get a bounce. But then it's probably going even lower. Yesterday we pierced 4,100. We're still right around that 4,100 level on the charts. The reason why that 4,100 is important. It's this pivot low right here in the charts, right? So again, you have this level. We're actually trading fractionally below it, but trying to get back above it. If that breaks, we have another technical level at just below 4,000. But really my downside target continues to be this 35 to 3600 level. That'll be at least where I start to buy aggressively. So amazing fall on gold. Notice again, this is very important for us gold bugs out there. The long-term bulls like myself on gold is that it's still acting like a risk asset. The stock market's been falling. Gold's been falling off a cliff. You need that dynamic to flip back to what we're used to, which is more like people exiting the stock market and then going into gold for safety. Until that happens, I'm skeptical on that it's made a bottom, a longer-term bottom. You need gold to go back to what it has been for hundreds of years, if not thousands, more of a store of value, store of safety. Silver went down. It did break briefly here, this $64 level. It's trying to hold on as best it can and get back above. Again, if this level confirms below, we likely are headed back to $54, which would be your next stop with an eventual downside target of probably around 50 bucks per ounce. And you can see this is your next stop right here. Pivot high, pivot high, pivot high, right? All right, natural gas today, not doing much. This one has been relatively quiet, considering Nat Gas, known as the Widowmaker, has been very quiet compared to gold, silver, and oil. But at the same time, that's okay. I don't mind that. I'm very carefully just watching the daily 200 moving average here. We're still below it, so there's nothing to do. If anything, it would shade the downside. If you break the 200, then I think you get a bigger breakout to the upside. Bitcoin. Bitcoin catching a bid today. Nice little bounce on Bitcoin. What I like about Bitcoin, number one, it hit double bottom. Number two is notice the green candle here. And look, the lows of the last two days are right at the low of the green. All right. So as long as we don't have a daily close, a red candle close below the green, these are inside bar patterns to basically something like this. Not very pretty that I'm drawing, but you guys get the gist. This actually could be a bullish pattern right here to the upside. So maybe Bitcoin will see if it can hold this pattern as long as it holds this 60,700 level. I think it's okay, and I would remain short term bullish. Now, mid to long term, yes, I still think it's going to go lower. But again, I'm a swing trader, so I'm looking at what opportunities there are in the near term. And near term, it looks like a potential positive. We need to take out the near term recent highs. That would get us our next leg up. All right, guys, I got to get to my trading room. Great action in this market here right now. Let's see what happens today. SpaceX IPO tomorrow. I'll keep you guys posted. Thank you so much for your love and support in the comments. Means the world to me. Make sure you like and subscribe to this channel here on Verified Investing to keep supporting us. I'll see you tomorrow. Take care.