GAME PLAN REVEALED: VIX Warning, Yield Hikes & Retail Mania Signals

In this morning’s GAME PLAN show, Gareth Soloway, Chief Market Strategist at Verified Investing, highlighted several warning signs beneath the market’s recent rally. From the VIX’s unexpected behavior to surging Treasury yields, a weakening dollar, and mixed signals in commodities, multiple intermarket dynamics suggest institutional caution—and potential short-term pullbacks. Meanwhile, the NASDAQ’s extraordinary 28.5% gain in five weeks has created lucrative swing-trade setups, and retail-favored names like Palantir, Robinhood and SMCI are flashing exhaustion patterns. Below, we unpack these themes with historical context, technical analysis and trading psychology to help you navigate today’s market complexities.

VIX Divergence: A Warning Sign for Institutions

The VIX, typically inverse to equity moves, rallied as stocks approached session highs yesterday. “When the markets go up, the VIX usually goes down,” Gareth noted. “When you start to see the VIX playing kind of the same move as the market, meaning that it starts to go up with the market, that tells you institutions are starting to buy protection.”

Historically, such VIX divergence often foreshadows pullbacks. During 2018’s late-year swoon, the VIX led equities higher before stocks reversed. While one signal isn’t definitive, paired with other red flags, it merits respect. Institutions buy options to hedge against sudden drops, so rising implied volatility alongside higher prices suggests rising hedging costs—and rising caution.

S&P 500 Futures and Daily Chart Stretch

On the S&P 500 futures (ES), prices remain slightly above yesterday’s close but below session highs. The daily chart shows a near-23% straight-line rally from early April lows, stretching the “rubber band” and increasing retracement odds.

Key technical levels include recent low pivots around 5175–5200. A break above the current high could invite a double-top formation near 5800 in futures terms. For swing traders, any swift 5–10% pullback would offer high-probability entries, as extended rallies often experience rapid retracements.

NASDAQ’s Parabolic Ascent and Swing Trading Opportunities

The NASDAQ Composite surged 28.5% in just five weeks—one of the fastest large-cap rallies in modern history. “I could probably count on one hand in my 26 years when the stock market has gone up 28% on the NASDAQ in a matter of five weeks,” Gareth remarked.

Parabolic moves breed volatility. A standard 5–10% pullback in the index could translate into 15–20% swings in high-beta names like Palantir or Robinhood, offering swing-traders lucrative setups. Technically, the index sits near the 78.6% Fibonacci retracement of its 2022–2024 decline, and yesterday’s high matched that level to the penny before a small retrace. Failure to close above this mark today could trigger pronounced selling.

Rising Treasury Yields: Fed-Equivalent Rate Hikes

The 10-year Treasury yield has climbed from 4.1% to 4.5% since early May—a 40-basis-point rise equivalent to nearly two Fed rate hikes. Rising yields increase borrowing costs, strain mortgage and refinancing activity, and pressure equity valuations by raising discount rates on future earnings.

Historically, sharp yield spikes have correlated with equity market pullbacks. In early 2022, the 10-year’s 50-basis-point surge preceded a sector rotation away from growth stocks. As yields approach 4.6% resistance, traders should watch for cracks in risk markets.

U.S. Dollar Breakdown and Global Slowdown Signal

The U.S. Dollar Index (DXY) broke down through a multi-year uptrend and retraced back to the “scene of the crime”—the former trendline—before rolling over. “Once you confirm a breakdown, you eventually retrace back to the scene of the crime,” Gareth taught last week.

A sustained move below 100 would imply a broader economic slowdown, as a weakening dollar often accompanies decelerating global growth. Weekly charts point to a downside target near 97, a roughly $3 drop. Currency importers and multinational earnings may face headwinds, and commodity-linked currencies could suffer further.

Copper’s Tepid Reaction to Tariff Cuts

Copper, a leading global economic indicator, remains flat despite China-U.S. tariff reductions from 60% to 30%. The expected reflationary boost failed to materialize, suggesting that even looser trade barriers may not spark a meaningful pickup in industrial activity.

In past cycles, sharp tariff cuts fueled commodity rallies; in 2005, for example, copper jumped 20% after China’s WTO accession. The current stagnation hints at structural slowdown risks rather than a cyclical reacceleration.

Commodities Roundup: Gold, Silver, Oil, Natural Gas

• Gold: Following a daily topping tail at the upper parallel channel, gold is retracing to support near $3,225. Rising risk appetite and higher yields have weighed on the safe-haven metal.
• Silver: Still contained within its bullish channel, silver has yet to break out. A close above $35 would target $34.50–$35.00 and beyond.
• Oil: Crude is nearing resistance at $65–$66. A failure there could set up a short entry targeting $60.
• Natural Gas: After canceling his prior short, Gareth notes gas is drifting lower. Trendline adjustments show human analysis can err, but price respected a slightly lower line—underscoring that “the charts are always right.”

Retail Mania Stocks as Contrarian Indicators

Retail-favorite equities are parabolic:
• Palantir (PLTR) has tagged its 2021 bull-market trendline.
• Robinhood (HOOD) is up 111% since April 7 and forming a double top.
• Super Micro (SMCI) exploded again in the pre-market.

“The stocks that retail loves are going bananas,” Gareth observed. Historically, extreme retail concentration in high-beta names marks market tops—for example, the 2021 meme-stock surge. When speculative fervor dominates, institutional players often use retail inflows as exit liquidity.

Bitcoin’s Emerging Double-Top Setup

On Bitcoin’s daily chart, a budding double-top pattern is forming. Initial “pop-and-pull” swings resemble early bullish consolidation, but the subsequent failure to make new highs signals caution. Short entries near recent peaks have already been executed, with swing targets on a 10–15% pullback—which often occurs when equities roll over.

Trading Psychology: The Charts Are Always Right

One of Gareth’s enduring lessons: “The charts are always right. Right? We know that the charts do what they want. They are always right. It’s our analysis that can be wrong.” Traders must accept human error—mis-drawn trendlines or over-confident bias—and let price action dictate decisions. Maintaining humility, focusing on high-probability setups, and respecting risk management separates consistent performers from the crowd.

Conclusion

Today’s market backdrop is defined by stretched technicals, rising institutional hedging, yield-driven borrowing costs, and mixed signals from currencies and commodities. While the S&P and NASDAQ have delivered awe-inspiring rallies, multiple red flags—VIX divergence, yield spikes, dollar breakdown, and retail mania—suggest a near-term pullback is likely. By combining multi-factor technical analysis with disciplined swing-trade strategies and psychological humility, traders can capitalize on retracement opportunities while managing risk in a complex intermarket environment.