🎯 Weekend Deep Dive: Broadcom (AVGO)

Broadcom Just Got Cheaper — But Is It a Trap or a Trade?

Big Growth, Big Drop.

June 7, 2025

Hello traders and investors —

Broadcom ($AVGO) was front and center this week, and not for the usual AI hype train reasons. This time, it made headlines for something far more old-school: a modest earnings beat… followed by a 5% drop. That’s right — the chipmaker beat expectations, posted double-digit revenue and earnings growth, but still got hit with profit-taking after the bell.

Now, I don’t trade headlines. I trade charts. And this one? It’s speaking loud and clear.

But before we jump in, let’s rewind and give you the quick story behind the move.

📊 The Setup

Broadcom reported Q2 earnings Thursday night. Here's the breakdown:

• Adjusted EPS: $1.58 vs $1.57 expected

• Revenue: $15B (20% YoY growth)

• AI Revenue: +46% YoY — huge

• GAAP EPS: $1.03 — more than doubled

• Free Cash Flow: $6.4B (up 44%, but shy of the $7B whisper number)

So why did it drop?

Because the market's expectations were even higher than the “official” expectations. That $600M gap in free cash flow spooked investors. And when you’re trading at a 52.5x free cash flow multiple, you don’t get to miss.

But forget all that. I want to break down what the chart is telling us — and it’s actually giving some very tradable signals.

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🧠 Let’s Break Down the Chart — Step by Step

Here’s what I’m seeing:

1. Price Action and Trend

Broadcom closed Friday at $246.93, down 5.00% on the day. That pullback was no joke — it sliced clean through a key support zone at $255.35, turning it into new resistance.

But zoom out just a bit… and this is still a strong, bullish trend.

• The stock is trading well above the long-term 200-day moving average (that orange line), which is steadily rising. That’s long-term strength.

• The 50-day moving average (blue line) is also trending higher and recently acted as dynamic support during the last pullback.

• There's a clear ascending trendline from mid-2023 — and so far, it's holding.

This is a textbook case of what I call a “buy-the-pullback.” A name where every pullback, like this one, gets scooped up by buyers.

2. Support and Resistance Zones

Here’s how the levels shake out:

• 🔻 New Resistance: $255.35

• 🔻 Next Overhead Resistance: $265.43 (the recent high)

• ✅ Support Zone 1: $221.35 (-10.36% below current price)

• ✅ Support Zone 2: $203.35 (-17.65%)

If the stock can’t reclaim $255.35 quickly, it could drift down toward that $221 area, which is where I’d be watching closely.

3. Volume and Relative Strength

• Volume on Friday surged to 41.15M shares — that’s heavy, which confirms that the move down had some real weight behind it.

• But here’s the kicker — Trend Strength is still a 10/10. This is a strong stock in a strong trend.

4. Momentum Indicators

• MACD is still in bullish territory but starting to curl — not a sell signal yet, just a yellow flag.

• RSI is hanging around the 65 zone — still strong, but coming off overbought.

• I’m also watching the stochastic — it’s topped out and crossing down, so short-term traders might want to wait for this pullback to base.

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🧭 How I’d Trade It —

Let’s say I’m looking to buy shares. Here’s how I’d approach it depending on my style: