2026 has been a very volatile year for semiconductors. Over the past two weeks, we’ve witnessed brutal chip lag pulls that caught many people off guard, and high-profile names were subjected to sharp corrections. However, as I detail in my book, Mean Reversal Trading, I am a strong believer in the premise that a rising tide lifts all boats. With the broader technology sector looking to stabilize and chips showing early signs of recovery, I’m keeping a close eye on Broadcom (AVGO) as my next setup. The chart shows some promising footprints, but we need to be very careful about jumping in. I rely on three of my favorite technical signals to evaluate this trade: Accelerated MACD (5, 13, 5): I prefer this fast MACD setup to catch momentum pivots before the rest of the market wakes up. The MACD indicator is currently tightly wound, as highlighted by the white circle on the chart. Although this may occur prior to an explosive move, a coiled MACD often leads to false positives. It might be a little premature here. That’s why you should use other indicators for confirmation. Relative Strength Index (RSI): To measure the underlying strength of this pullback, let’s take a look at the RSI. Although slowly rising (currently sitting around 44.7), the line remains relatively flat. It has yet to show the steep upward trajectory needed to actively see institutional money flowing back into the stock. Directional Movement Index (DMI): DMI is the go-to indicator for assessing the internal health of a trend. Fortunately, we are seeing the direction starting to change. As the arrows on the chart show, the red line (sellers) is hooking down and the green line (buyers) is hooking up. This convergence is a very encouraging sign, marking the first signs of a structural trend change and indicating that the selling pressure from recent bullish buying is finally reaching its limit. Trade Setup: AVGO 370-375 Bull Call Spread With the MACD coiled and the RSI still flat, putting money in at this moment carries unnecessary risk. The wisest course of action is to wait a day or two until it gains momentum. As the old trading adage goes, “Waiting pays off.” Let the setup sit for 24-48 hours and you’ll know if this signal is real or just a dead cat bounce. Once AVGO confirms a breakout, target an at-the-money (ATM) bull call spread based on the current price. Even if waiting means having to build the spread with a slightly higher strike, it’s always worth paying that little premium for solid momentum. Once the indicator shows a definitive green light, simply wrap the strike at the live price (buy the ITM call, sell the OTM call). If tracking these settings manually isn’t your style, Maya (our trading algorithm) handles entries and exits completely autonomously using a 100% rules-based system. We’re currently in soft launch, so you can lock in your $47 launch offer here. Here is my exact trade setup (based on current price $373.90): Buy $370 call, expiry August 7th Sell $375 call, expiry August 7th Number of contracts: 1 Cost: $250 Potential profit: $250 — Nishant Pant Founder: https://tradewithmaya.com/ Author: “Mean Reversion Trading” Youtube, Twitter: @TheMeanTrader Disclosure: None All opinions expressed by CNBC Pro contributors are solely their own and do not reflect the opinions of CNBC, its parent or affiliates, and may have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
