That's a Crazy Broad...com

Broadcom (AVGO), below on its quarterly chart, reports tonight to headline an intriguing late-season lineup alongside DOCU and LULU. 

The San Jose-based semiconductor firm is valued at $1.25 trillion market cap as I write this, which may take quite a few of you by surprise since Broadcom is not considered not be quite in that "Magnificent 7" elite group at the top of the market. 

Nonetheless, after catapulting higher by more than one hundred twenty-five point off the early-April lows, AVGO is sporting one of the most pronounced quarterly chart candlesticks you will ever see for a stock of its size. We have previously noted the obscene quarterly chart that Netflix is sporting, too, as that name continues to melt up. 

However, you will note that NFLX is valued at less than half the market cap of AVGO. 

The actionable information here is that, historically, candlesticks of this size after prior, steep multi-year advances often signal a violent struggle for control, which eventually resolves in favor of sellers--The dot-com bubble saw quite a bit of this in 2000, even stretching into 2001 in some case, before the resolution lower. 

And I expect the same here, despite the daily Trump headlines seemingly designed to pump markets and despite (or, perhaps, because of) the endless retail all-you-can-eat dip-buying coupled with momentum chasing frenzy. 

The sheer size of this AVGO quarterly candle, headed into earnings, more or less suggests that the market has increasing concerns how to value the firm despite buyers' resilience. I have made that point many times over, which is inevitable when we have a long, drawn out cycle like this. But with a PE of 127 (Forward FE of 33), AVGO presents a good late-seasons "tell" for just how much substance this rally actually has.