Broadcom (AVGO) – Pre-Earnings Analysis: Bearish Setup Amid Market Euphoria | PUT June 21
Broadcom (AVGO) is set to report its quarterly earnings on Thursday, June 6th, after the market closes. This analysis outlines a potential short-term correction based on a confluence of technical signals, overextended sentiment, and sector precedent.
1. Market Context
AVGO has benefited heavily from the AI-driven semiconductor rally, particularly following NVIDIA’s recent surge. However, the current price seems to reflect not just strong earnings expectations, but extraordinary ones. This sets up a scenario where anything short of a blowout report could trigger a sell-off.
2. Technical Signals
RSI (1D and 3D) is in extreme overbought territory, with no new bullish divergence.
Bollinger Bands: Price has breached the upper band, signaling potential exhaustion.
Rising channel pattern (on 15m and 1H) suggests a potential liquidity grab at resistance.
MACD divergence is emerging.
Buyer volume is fading, indicating momentum loss near highs.
3. Fundamental Setup
AVGO has beaten earnings in 57 of its last 68 reports — but this is already priced in.
AI and VMware-related growth have been widely publicized.
Market rumors of stock splits or buybacks add speculative pressure without confirmation.
Peers like ARCW recently underperformed despite high expectations, reinforcing risk.
4. Sentiment Risk – Criterion #26
Social media, analysts, and news sentiment are overly bullish. There is a consensus that Broadcom will “crush it,” which ironically increases the risk of a negative reaction if the numbers come in as just “strong,” rather than spectacular.
This aligns perfectly with our Criterion #26: unrealistic earnings hype as a bearish trigger.
5. Trade Setup
Contract: PUT, $260 strike, expiring June 21
Entry cost: ~$7.50 per contract
Target: $245
Risk: Total loss if price breaks $270+ with strong IV crush post-earnings
6. Conclusion
AVGO shows a short-term bearish opportunity due to technical overextension, saturated sentiment, and a high bar for earnings. Even a positive report might not be enough if the results fail to exceed already aggressive expectations.
This trade uses only one PUT contract, maintaining controlled risk without additional leverage.
Disclaimer: This is not financial advice. The analysis is shared for educational and strategic insight purposes only. Risk management and discipline are essential.
Broadcom (AVGO) is set to report its quarterly earnings on Thursday, June 6th, after the market closes. This analysis outlines a potential short-term correction based on a confluence of technical signals, overextended sentiment, and sector precedent.
1. Market Context
AVGO has benefited heavily from the AI-driven semiconductor rally, particularly following NVIDIA’s recent surge. However, the current price seems to reflect not just strong earnings expectations, but extraordinary ones. This sets up a scenario where anything short of a blowout report could trigger a sell-off.
2. Technical Signals
RSI (1D and 3D) is in extreme overbought territory, with no new bullish divergence.
Bollinger Bands: Price has breached the upper band, signaling potential exhaustion.
Rising channel pattern (on 15m and 1H) suggests a potential liquidity grab at resistance.
MACD divergence is emerging.
Buyer volume is fading, indicating momentum loss near highs.
3. Fundamental Setup
AVGO has beaten earnings in 57 of its last 68 reports — but this is already priced in.
AI and VMware-related growth have been widely publicized.
Market rumors of stock splits or buybacks add speculative pressure without confirmation.
Peers like ARCW recently underperformed despite high expectations, reinforcing risk.
4. Sentiment Risk – Criterion #26
Social media, analysts, and news sentiment are overly bullish. There is a consensus that Broadcom will “crush it,” which ironically increases the risk of a negative reaction if the numbers come in as just “strong,” rather than spectacular.
This aligns perfectly with our Criterion #26: unrealistic earnings hype as a bearish trigger.
5. Trade Setup
Contract: PUT, $260 strike, expiring June 21
Entry cost: ~$7.50 per contract
Target: $245
Risk: Total loss if price breaks $270+ with strong IV crush post-earnings
6. Conclusion
AVGO shows a short-term bearish opportunity due to technical overextension, saturated sentiment, and a high bar for earnings. Even a positive report might not be enough if the results fail to exceed already aggressive expectations.
This trade uses only one PUT contract, maintaining controlled risk without additional leverage.
Disclaimer: This is not financial advice. The analysis is shared for educational and strategic insight purposes only. Risk management and discipline are essential.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.