Excess AI Compute Slams Semi's, Meta Rips, Fear Spreads Ahead Of 'Blowout' Jobs Report

My name is Gareth Soloway and I was a
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Hey folks, welcome to my trading game
plan. My name is Gareth Soloway, chief
market strategist here at
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We just had an earthquake in the
markets. Meta coming out and saying that
they are creating a new company to sell
excess compute. All right, this is an
earthquake because this is the first
time we've heard about excess within the
semiconductor space. Semiconductors are
getting slammed this morning. We see
Meta surging. Microsoft is jumping up.
Anything that basically this will save
money for having excess is positive.
that's like a Gemini or any of these
other players while any out there again
chipwise or other like memory stocks are
taking a beating folks this is a big
deal and it's interesting it's coming at
the start of the next quarter okay so
let's frame this correctly yesterday was
the final day of the quarter there was
window dressing and window undressing
window dressing is where a hedge fund
would say okay we didn't hold intel all
quarter long but let's add it on the
last day of the quarter so that when we
send our client statements they see that
it looks like we held it all quarter
long. They don't know how long we held
it. On the other side, window undressing
is where you have a loser. Bitcoin maybe
through IBIT or Microsoft or other names
that have been dogs for the quarter.
They dump those at the end of the
quarter so they don't appear on the
statements to clients. Well, guess what?
Yesterday we saw a rally up in
semiconductors. Why? because of window
dressing and we saw selling in a lot of
the dogs like you know the Adobe's the
metas the etc. Well, let's let's see.
That quarter is over. Now it's a new
quarter. And could this be the quarter
resurgence of the Microsofts and the
Metas? Incredible. Let's jump into the
futures here, folks, and take a look.
The S&P futures are down a little bit
here. Again, not a massive amount by any
stretch. Let's go to the 10-minute
chart. But again, we closed right over
here on the S&P. So, we are down just a
little bit, but you're not seeing the
big fall in the S&P. Why? because it's
more diversified. The NASDAQ 100 is the
one you're seeing the biggest drop in
this morning because that is more
concentrated in the AI stocks. So, the
AI stocks are falling. The NASDAQ 100's
falling. The S&P is saying, "Okay, we're
down, but we're not in freef fall
because we got all these other companies
to diversify with, and it's not as
concentrated." All right, so that's
where we are. If we look at the NASDAQ,
you can see here the NASDAQ 100 futures
yesterday. We closed around the 3 30,500
level. We're trading at 30,300. So,
you're down about 200 plus points on the
NASDAQ in the pre-market here. Now, the
big movers here, look at Meta. What a
rally. As soon as they announced it,
this is on the one minute chart, but if
we look at the 10-minute chart here,
pre-market, Meta surging to the upside.
Yesterday, we closed on Meta around 563.
It hit $612
in the pre-market. It is pulling back
just a little bit, but this is a huge
pop in Meta. Now, remember, Meta was a
dog for the last quarter. You go back to
the March area here. I mean, you're
basically you were basically down at the
52- week lows on the meta chart, but
today it is seeing a beginning of
quarter resurgence on this excess
compute
narrative, whatever you want to call it.
All right, this news. Now, if we go to
other names out there, what were other
dogs here in the early or in the last
quarter? Microsoft. Microsoft is
rallying up this morning. This should be
potentially one of the pop the top
stocks here going into the new quarter
as again it's been beaten down
significantly over the last three to six
months and again really this selloff was
just incredible but a good rally on that
as well. Now look at names like Micron
Micron on this news taking a monster
drop trading as low as 1077
before a little bounce back to about
1093. SanDisk, same thing. Big drop in
the pre-market. And if we even look at
names like Nvidia here, look at Nvidia's
dump. I mean, that is a big dump from
199. Basically closed yesterday at base
200, dropped pre-market to 194 and now
bouncing back to about 195 to 196. So
that's where we are right now, folks.
Again, AI is all of a sudden thrust into
turmoil. window dressing is done. The
quarterly statements go out to clients
for the hedge funds. Now, these hedge
funds are going to say, you know what,
stocks that have run significantly,
we're probably going to lighten up and
we're going to look at high quality
names that have been beaten down. All a
Microsoft or some of these other names.
Now, one stock catching my eye today is
actually in the metals arena. All right.
Now, this is Alcoa. Alcoa is dropping
today, but take a look at this chart.
There's a major support coming up at 40,
just below $48 per share. Notice the
stock pre-market is trading at 4903.
So, it's basically a dollar or so away
from this level. Former pivot high is
the first factor. And then if you do a
fib from this low to this high, this is
right around the 618 Fibonacci retrace
getting oversold right into this 48 to
47 level. Looks very, very attractive on
this chart. So, we'll keep an eye on
that, folks, as we continue to monitor
this name. Now, we'll look at the metals
in just a second, but just going to a
couple other things here, folks. Let's
go back to the S&P 500 daily chart.
Remember folks, we're watching this
trend line here. This is a trend line
that goes back to the bull market high
of 2021 through the high here in 2025
into 2026. It broke out. We've hammered
on it. You're watching this line. This
is the line in the sand. As long as we
stay above this level, the breakout on
the S&P is fine. All right. It's fine.
It's still a bro a breakout. It's still
broken out. If we break through that
trend line, it becomes a failed
breakout. And like I say many times in
technical analysis, what you see in
markets is the biggest moves come from
failed moves, which would warrant a big
move down. Now, listen, we're dropping
on the S&P today, but we're only
dropping a little bit. And don't be
fooled. Even though we're dropping
today, a lot of the institutions are
already on vacation for the July 4th
holiday. So, you're not going to see the
volume that's going to really have tooth
and nails on this market. I think you
probably get a down day in tech today.
S&P could be slightly negative or flat
on the day. It's really next week when
we come back from the holiday that I
want to start watching that zone. Does
the S&P break back to the downside and
fail its breakout. Looking at the NASDAQ
100 here, same general thing. NASDAQ 100
is trading down this morning. I don't
expect, again, as bad as this news is
for AI, you know what? The talking heads
will spin this. They will spin this and
that's what they do because they got to
keep the retail buyer for buying in to
be exit liquidity. So they'll spin it.
They'll figure out a way to say, "Oh,
well, what Meta is doing is this and
it's not really as bad." Bottom line is
anytime a company uses the word excess
in a in a in an arena that has been
driven higher by lack of supply, that's
that's usually what we would call a
turning point in logical thinking. And
so you don't want to be fooled by that
narrative. It doesn't mean you're not
going to get big bounces in AI stocks,
but this again to me is something we
need to pay attention to. Remember, just
in the last week, I've been warning you
about these other models out there where
companies are saying we're spending way
too much money on tokens for AI. We've
got to go to cheaper models. This is in
that same vein. And remember, Apple,
Apple has gone to the government and
said, "Hey, could we get a waiver to buy
memory chips from these Chinese
companies that are blacklisted
essentially from US companies for
memory?" If that occurs, that's another
I mean, basically, that's telling you
that there's more memory out there, just
US companies can't necessarily buy them.
So again, be careful here. The quarter
is locked in for companies or hedge
funds that had those good gainers.
They've locked in those gains. Now,
they're looking at that exit liquidity.
They're saying, "Okay, we really wanted
to get out of these plays before the end
of the quarter. How do we do that?" Oh,
we can now because we don't have to send
send statements out for quite a while
before that next quarterly end. All
right, so that's where we are at this
point. Google today is popping as well.
You can see that same sort of narrative
is a bullish narrative for Google with
excess compute. It means it might be
cheaper for them to run their Gemini and
all these other uh platforms. And again,
that is a positive. Now, let's move over
to a couple other things. The 10-year
yield continues to push up. Now, listen,
normally jobs data would be right on my
forefront. We would have talked about it
already, but this meta stuff was very,
very important. It It's basically an
earthquake, like I said. Now, this is
the kicker. We got the ADP SE non-farm
payrolls report this morning that which
is a private company that puts out the
job the monthly jobs numbers. It came in
at a gain of 98,000 jobs. Now, that was
actually less than expected. Now, this
is the kicker here. Tomorrow, we're
seeing the government. So, usually the
government releases its non-farm
payrolls on Friday, the first Friday of
every month. In this case, they're
rushing the number out on Thursday
morning before the stock market opens.
Now, I've seen it many times over where
when it's a bad number or not a great
number, they'll say, "You know what?
we're not going to release it on on this
Friday with the market and the holiday.
We'll put it out next Friday. And they
push it out beyond the holiday because
they don't want to sour the mood. They
want they're you know, in general, the
government is like, "Ah, well, we don't
want people to see that the economy is
really struggling." The fact that
they're pushing it out even they could
release it on Friday. By the way, we've
seen even when the markets are closed,
they still will release it. They're
releasing it on Thursday before the
stock market trades. My guess is it's a
very good number. But ADP historically,
check this out guys, the ADP number,
this private number that that this
company does that's private, their
number has been so much more accurate
than the jobs number from the
government. And so what do we expect? I
expect tomorrow non-farm payrolls to be
a blockbuster number. It's going to be a
great number, the best ever. You know,
those type of things. probably like
150,000 maybe more jobs added. Now, I
could be wrong. Um, but what do we think
will happen next month to that number?
If the ADP number, which is the private
company number, is showing us a 98,000,
chances are that government number will
be revised down as we always see after
this month. In other words, they're
trying to fluff it up for the holiday
because they know people are going to be
sitting around their grills for July 4th
talking and they want the narrative to
be, "Wow, did you see the jobs number?
That's so amazing."
I think we're all a little smarter than
knowing about that stuff. But listen, I
digress. Anyways, let's get back to the
charts here and take a look. If we flip
over to gold, gold today is flat to
positive. Look at how it keeps on trying
to break through this lower area right
here and is still being held. So, that's
a small positive for the time being.
We'll continue to watch this overall.
Can it be saved? Can we hold this and
start rallying up to resistance around
4,300 or do we break this support and do
we dump out to that 3500 level? We'll
have to watch and see. Silver, this is
one of the most classic bare flags I've
seen in a while. So, this is not good. I
still think silver could maybe retrace
here, but it would still be in the
general vicinity of what we would call a
bare flag, right? So, you could kind of
continue to come in here. As long as we
don't recapture $64 per ounce on silver,
it is a bearish pattern formation. And
if silver goes down, there's two ways of
thinking about it, right? So, generally,
you would think gold would break down.
The only caveat is silver is more of an
industrial metal. So, if silver breaks
down, there could be a narrative here or
a a news headline that maybe in the next
couple months, the jobs market is
weakening more than expected and
therefore industrial demand could be
weakening as well. Maybe this excess
compute could also be part of the new
narrative here that drives silver lower.
Right? One of the things we've been
hearing about is how, you know, the
silver demand is so robust. Obviously,
you have combustion engines, but also
copper for data centers and all these
other things. And if there's now looking
like within a year, we're going to have
excess compute, that could be a reason
why these semi-precious metals or
nonprecious metals start to come back in
as well. Just food for thought, guys. I
always just try to bring things to your
attention so that you can think about
it. Think outside the box. Don't fall
into the market and institutions want
you to think this way. Think outside the
box. formulate your own opinions about
the data and the charts. And that's what
the charts give us the ability to do is
look and say, "Yeah, we're hearing all
this, but the chart is telling us
something differently." That's something
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cool stuff. All right, let's continue
on, guys. Where's oil trading? Oil is
flat to negative. Oil is flagging here.
It probably means it wants to go down to
67 and fill that gap. Granted, that's
not very far. I still think oil is
closer to a short-term low than a high.
I'm a buyer down here. Um, in the near
term, we know that this was how it was
trading before we had the Iran attacks
and that was the pop. So, this would be
a full 100% retrace at 67. I still think
that oil has a chance to move higher
here. All right, so we'll keep an eye on
that as we continue through. Uh natural
gas had a nice move yesterday, but it
came or is coming back in a little bit
today. The cup and handle pattern I've
talked about continues to be intact.
Nothing new on this radar. And then we
have Bitcoin. Bitcoin. Bitcoin. So,
Bitcoin is flat on the day. This is a
new
trend line that I'm showing you guys.
All right. So, we are in a bare market.
There's no doubt about it on Bitcoin.
But we're in stage two, which is the
final stage of the bare market. So
again, if I had to give this innings in
a game or let's say let's say football/s
soccer, we'd be in the second half. We
wouldn't be in the overtime period or
the extra time yet, but it would be in
the second half. And the reason you can
tell that is because here's your trend
line from all-time highs, right?
Connects through this high and you were
below that, right? Once you break above
it, that's your halfway point in the
bare market. So here we're now above it
and we're using this as technical
support. And so while I still think
generally there is more downside on
Bitcoin, at least we're in the second
half of it, it still means that we
probably trade down potentially to
50,000 or sub50. But at least we are
closer to that bottom and the end of the
bare market per the charts than not. So,
interesting little thing there. Again,
stage one is complete. Here was where
stage two began, and now we're fighting
through stage two. The final overtime or
excess time is going to be where we get
into that bottoming pattern somewhere
down here potentially. And by the way,
this doesn't mean Bitcoin can't bounce.
I will say this, there are some altcoins
that look really intriguing to me, like
Salana right now. The chart's actually
very interesting. It's borderline
breaking out. So while Bitcoin's been
making lower lows and you know at the
lows look Salana low higher low and it's
right up against a trend line for a
potential breakout. XRP it's not really
up against its but at least it's in a
very tight wedge. Look at this wedge
pattern. If for some reason XRP can
break above 110 huge breakout on XRP. I
would expect 20 to 50% upside on XRP if
it breaks out. Now it hasn't broken out
yet so we don't know. Maybe it breaks
down. That could happen as well. But
again, these some of these charts are
actually looking semi intriguing. All
right, guys. I got to get going in my
trading room here. This is going to be a
wild day in trading. As always, don't
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looking to trade some of this action
this morning. You guys have a great rest
of your day. Thanks so much for tuning
in. Take care.