How Long Will This “AI Hangover” Last? VIEW IN BROWSER By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - AI investors have woken up with a nasty hangover
- Big drops in AI bellwethers show investors are nervous
- Our new sell signal spotted the trouble early
- Use our Flash Crash Screener to check the stocks in your portfolio
- A reader asks: “Why no comments on precious metals?”
AI investors woke up to a nasty hangover last week… We’ve all had a bad hangover or two. You wake up with a dull ache spread across your head. You’re foggy on the details of the night before. Your stomach is making moves like a Cirque du Soleil gymnast. And all you want is a tall glass of water and the most indulgent breakfast of your life. The thing about hangovers is they often come after an especially fun party. And with the tech-focused Nasdaq 100 up 130% since the start of 2023… and some AI stocks up a lot more… the AI party on Wall Street has been a banger. That’s why the hangover AI investors felt last week was so nasty. On Friday, the Nasdaq 100 dropped close to 2%, putting it into negative halfway for December, a seasonally strong month. Over the past 15 years, the Invesco QQQ Trust (QQQ) – which tracks the Nasdaq 100 – has been up in December about two-thirds of the time for an average return of 0.5% and a median return of 2.59%: 
The index will have to make up some ground if there’s any hope of a Santa Claus Rally this year. And if this December winds up a losing month, we could stand to lose a lot more. When QQQ has been down in December, the average loss was 4.5%. That average gets dragged down by some notable years like 2022, when the benchmark lost 9.1%… and 2018, when it lost 8.6%. | Recommended Link | | | | Futurist and Senior Analyst Eric Fry just did a little portfolio housekeeping for his readers. But when Eric cleans house, it rains money on those who followed his advice… Liberty Energy Inc. (LBRT) – Up 31.6%, TotalEnergies SE (TTE) – Up 51.2%, Valero Energy Corp. (VLO) – Up 86.2%, Oracle Corp. (ORCL) – Up 27.3%, and Global X Uranium ETF (URA) – Up 53%. So what does Eric Fry say to buy next? He’s got 7 trade ideas he recently released for free, including full analysis, names and ticker symbols. Grab these hot recommendations right here at no cost. |  | | But what’s suddenly turned the AI trade “risk off”? We can start to answer that question by looking at two popular tech stocks, Broadcom (AVGO) and Oracle (ORCL). AVGO dropped as much as 12% on Friday, its worst single-day drop since January. And ORCL closed the week down 15%, its largest weekly fall since 2018. Both saw those drops after their mixed-bag earnings reports. Broadcom CEO Hock Tan said the company is holding back on a 2026 annual revenue forecast while profit margins are shrinking. Its $73 billion revenue backlog – expected to fulfill over the next 18 months – also didn’t meet investors’ expectations. The ink-to-paper earnings, however, did. Revenue grew 28% from last year to $18 billion. Net profit grew 39% to $9.7 billion. And the company raised its dividend 10% to $0.65 per share. Earnings and revenue now are not nearly as comforting to investors as a confident forecast. And the guidance proved more important than the beat. Same deal with ORCL. Revenue was slightly short of expectations at $16 billion, but earnings beat at $2.26 per share against expectations of $1.64. But Oracle forecast expense growth of $15 billion to a total of $50 billion in 2026. And a day later, it announced delays on data centers it’s building for OpenAI. Investors want to be assured that the AI gravy train will keep running into 2026. And that’s not what they’re hearing. You may be tempted to buy the dip… And we can say with confidence that you’d be half right. How do we know? Our new sell-alert signal – one part of our new collaboration with 60-year investing legend Marc Chaikin. Marc is one of Wall Street’s original “quants.” His first day as a broker was in 1966, when fundamental analysis was just about the only way any respected analysts would talk about markets. But Marc took a different path. He developed his own systems – one of the very first to ever do so – based on price momentum and volume. Six decades on, Bloomberg and Reuters carry his Chaikin Money Flow indicator on their terminals. And hedge funds and banks around the world use it to spot shifts in institutional buying and selling pressure. And thanks to the success of these tools, Marc has managed money for Steve Cohen, George Soros, and Paul Tudor Jones – guys who don’t return your call unless you bring a real edge. Marc also has a following of more than 800,000 individual investors worldwide who use his tools to navigate the markets. These include the Chaikin Oscillator, Chaikin MoneyFlow, Chaikin Volatility, and the granddaddy of them all: the Chaikin Power Gauge. It uses 20 factors to rate stocks based on fundamentals and technicals. And it’s the culmination of everything Marc has built in his career. And for proof on how crucial the Power Gauge is, just see what his followers had to say. Power Gauge user Ana C. made $90,000 in just 18 months: “Please don’t stop providing recommendations. I’m not an aggressive buyer, but my portfolio has gone up over $90,000 in the last year and half, even after monthly withdrawals to supplement my fixed income. While Bill E. reports turning $20,000 into $75,000: “Since I got my original Power Gauge subscription three or four years ago, I have turned $20k into $75k. I appreciate the effort you and your team are making to help the retail investor.” Ben Y. tells says he made back $216,000 in losses following Marc and his system: “I will not buy a stock without having a positive Power Gauge rating. It helped me recover my $216,000 loss from the April 2025 low to a positive 21% gain today. Compared to other services out there being offered, the Power Gauge is superior in what it offers the investor.” We’ve long admired Marc’s work here at TradeSmith. And this year, we got the chance to partner with him to launch a new sell-alert system. Between the Chaikin data and ours, the new indicator builds on TradeSmith’s long-running focus on using volatility to make smarter trading decisions. Let’s look at what our new early warning system says about AVGO and ORCL… The new indicator is still bullish on AVGO as I write. That means despite the recent drop, it’s in a strong uptrend and is considered a buy. No early warning at this point. That bullish signal fired as an entry recommendation on May 16 of this year, and AVGO is up 57% since. 
But our system flashed a sell alert on Oracle on Nov. 20 – three weeks before its rocky earnings report. And ORCL is down about 10% since that sell signal fired. 
Previously, an entry signal flashed on ORCL June 3 ahead of a rise of as much as 94%. Last week we released free, limited access to our new signal for anyone who signs up for VIP access to our launch event with TradeSmith CEO Keith Kaplan tomorrow, Dec. 16, at 10 a.m. ET. And I’d encourage you to not just to sign up for the screener, but also to show up on Tuesday. Because Marc will be joining us to talk about why he believes 2026 will be “the Year of the Bear.” And with a track record like this, you shouldn’t take Marc’s prediction lightly… - At the start of 2022, he warned the post-COVID bull run was fragile – just months before stocks slid into a bear market.
- In early 2023, he turned bullish again, shortly before the S&P 500 surged 26% for the year.
- Marc’s project the S&P 500 would finish 2024 between 5,600 and 6,000 – far above Wall Street’s consensus – and his call proved more accurate than 20 major firms.
- By early 2025, he cautioned of a “violent shift,” just ahead of the 19% tariff selloff in the S&P.
Marc will reveal details of his latest prediction during tomorrow’s event. And if you want to grow your wealth in 2026… and sidestep big losses… you’re going to learn a ton. Here’s the link to sign up. If Marc’s right as he was so many other times this decade, tomorrow’s event could the most important you attend all year. Before you go… A reader asks: “Where’s the gold?” As longtime Daily readers will know, you can write in with your thoughts, feedback, and questions to feedback@TradeSmithDaily.com. My favorite emails are requests for stocks to analyze with TradeSmith’s tools or themes to look at through the same lens. Here’s one I got in about gold… I’m curious as to why there have been no comments on the precious metals markets especially since they are clearly in parabolic mode. It’d be nice to get your analysis. – Keith W. Thank you for writing in, Keith. The last word on gold in these pages came from our growth investing expert, Jason Bodner, on Oct. 9. He used his Quantum Edge system to recommend Agnico Eagle Mines (AEM), Newmont (NEM), and Royal Gold (RGLD). Kudos to Jason, those are up 4%, 15%, and 13.5% since he wrote you. And I’ve been recommending you buy gold stocks going back as far December 2023, when I called out a six-month breakout in the VanEck Gold Miners ETF (GDX) when it was trading around $30. It’s at nearly $76 today. But you’re right, lately, we’ve been unusually mum about the precious metals rally here in the Daily. With so many great things happening at TradeSmith lately – the AI Super Portfolio, the T-Line, the Flash signals, and plenty more – we’ve hardly had the time. But you’ll be pleased to know that our new signal has been bullish on GDX since Feb. 6. Riding that signal would’ve have given you a 108% gain. Silver has done even better. Since our signal went bullish for the Global X Silver ETF (SIL) on Feb. 13, it’s up 121%. We’ll make a note to cover the sector more often. Thanks for reminding us. And if you have gold stocks you’d like to check on, you can use the free trial version of our Flash Crash Screener. When you join us for our webinar on Tuesday, you’ll get the full details on one stock that Keith and Marc say you should buy heading into 2026… and on a popular stock that you should avoid. Get the full details right here, and do it soon. Your chance to use our limited time Flash signal screener ends at 10 a.m. tomorrow. To building wealth beyond measure, 
Michael Salvatore
Editor, TradeSmith Daily P.S. This week, I’ll be sitting down with TradeSmith CEO Keith Kaplan to discuss not just the new Flash signals, but also two other huge new benefits that have come out of the TradeSmith Research Lab. You’ll hear all about those on Saturday at 2 p.m. But between now and when I sit with Keith on Wednesday, I’d like you to do me a favor… Use that same email address I shared earlier, feedback@TradeSmithDaily.com, and give me one stock you’d like us to look at during our interview. We’ll look at it not just through our new sell signal, but also through another TradeSmith tool that could make a big difference. I can think of no better way to show you all the great things coming your way than to analyze your favorite stocks live. I’ll be randomly picking just three stocks from the ones you send. So if you want to have a chance to see me analyze your stock, send it in now. | 
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