GAME PLAN REVEALED: Market Rebound, Yield Dynamics, and Sector Highlights

In this morning’s GAME PLAN show, Gareth Soloway, Chief Market Strategist at Verified Investing, dissected the market’s lightning‐fast recovery from Friday’s Moody’s downgrade, highlighted key technical levels on the S&P 500, and mapped out trading opportunities across bonds, equities, commodities, and crypto. From a potential retest of all‐time highs on the S&P 500 to a 20% surge in quantum computing names like QBTS, today’s analysis underscores the importance of multi‐factor setups, patience, and understanding market interrelationships. Below, we expand on Gareth’s insights with added historical context, technical deep dives, and the psychology behind trading the “buy the dip” mindset.

1. Market Reaction to Moody’s Downgrade: Alignment and V-Bottom Bounce

Friday night’s surprise from Moody’s sent futures sharply lower, only to see “buy the dippers come in full force and buy the market up, essentially closing it flat.” Historically, U.S. debt downgrades have spooked markets (e.g., S&P’s 2011 cut), yet this episode marked a twist: Moody’s simply aligned its rating with the other two agencies, which had already cut U.S. debt over the past year.

This alignment removed the shock factor, and by Monday’s open, dip buyers engineered another textbook V-bottom. While V-bottom recoveries have become common, it’s dangerous to assume every selloff ends in an immediate recovery. As Gareth warns, “the markets historically have taught me the hard lessons of never assuming anything is going to always repeat every single time.”

Key takeaway: Confirm V-bottom strength with follow-through buyers and volume. If the S&P retests support below today’s intraday lows, it could negate the bullish narrative and shift probabilities lower.

2. Technical Resistance on the S&P 500 and JP Morgan’s Caution on Tariffs

On the daily chart, the S&P 500 faces resistance right around the 6,000 mark—a level that coincides with a gap from April’s selloff. Intraday (10-minute) charts reinforce this barrier. Should buyers overcome it, the path opens toward all-time highs once again. If not, profit taking may intensify.

Adding to the caution, JP Morgan’s CEO Jamie Dimon raised concerns about market complacency: “there was a lot of complacency in the market... not seeing the full weight of the tariff implications factored into prices.” Historically, tariff escalations (e.g., 2018 U.S.–China trade tensions) have pressured corporate earnings and multiple compression.

Traders should watch:

Close above 6,000 futures for bullish confirmation.
Failure and reversal below intraday support as a signal to reduce risk.
Sector rotation: defensive sectors may outperform if tariffs bite.

3. Yield-Equity Relationship: 10-Year Treasury Yields Set the Tone

The inverse relationship between bond yields and equities remains a dominant theme. Yesterday, 10-year yields peaked near 4.56% at the open and then fell, while stocks rallied—mirroring the classic “rates down, equities up” paradigm. Gareth projects yields climbing to the down‐sloping trend line around 4.74% before stalling.

Historical perspective: In the 2022–2023 hiking cycle, each capitulation in yields coincided with equity rallies. Conversely, yield breakouts often triggered market corrections. Current technicals on the 10-year chart suggest:

A short-term retrace to prior breakout levels could occur.
A sustained move above 4.74% could pressure growth stocks again.

Positioning considerations:
• Use bond ETF spreads (e.g., TLT vs. SHY) to hedge equity exposure.
• Monitor the yield curve–inversion thresholds for early recession signals.

4. Sector Snapshots: Quantum Computing Rally, Home Depot Earnings, and Dollar Dynamics

Quantum Computing Stocks (QBTS, RGTI, RGET)

QBTS jumped roughly 20% after unveiling a new mega quantum computer. The parabolic rise suggests some investors “got inside information” beforehand. On QBTS’s daily chart, pivots from recent lows project parallel resistance in the $14.50–$15.00 range. If the stock closes below that zone, expect profit taking; a close above could carve a new support pivot.

Home Depot (HD)

Home Depot beat revenue but missed on earnings per share. As Gareth explained, “bottom line is earnings per share; top line is revenue.” Despite the EPS miss, robust guidance lifted HD shares about 1.4% from yesterday’s close. Key levels:

Resistance: $390
Support: $371.50

U.S. Dollar (DXY)

The dollar remains flat but underneath a major former support level—now resistance. A sustained rally above that level could stall commodity rallies and buoy U.S. asset flows. If the DXY drops, expect renewed commodity strength.

5. Precious Metals and Commodities: Gold, Palladium, Oil, and Natural Gas Patterns

Gold (XAU/USD)

Gold has stabilized after its recent pullback into a key support zone. Gareth posed the question: “Are we forming a reversal back up or a bear flag?” Immature patterns carry higher failure rates. Wait for a daily close below support to confirm a bear flag or above resistance for a reversal.

Palladium (PA1)

Palladium is confirming a breakout above its pivot high near 1,150. First stopping point could be just over 1,300, with a secondary target around 1,200. Palladium’s rarity—20–30× scarcer than gold—can magnify upside in fiat-printing environments.

Oil (WTI)

Oil’s macro pattern remains bearish following a downside break of long-term support. Short-term price action is choppy, oscillating with no clear bias. A rally into a significant resistance zone could offer a tactical short.

Natural Gas (NG1)

Natural gas has been under pressure for weeks but is bouncing today on the seventh session—the “time count” concept from Winning Trader. Yet, price sits in no-man’s land, far from both clear support and resistance. Patience is key: wait for a clean test of either zone before committing.

6. Cryptocurrency Focus: Bitcoin’s Bull Flag and Safe-Haven Debate

Bitcoin’s correlation with equities resurfaced as BTC bottomed alongside stocks and then rallied into yesterday’s close. Gareth noted the bull flag breakout remains valid “as long as [Bitcoin] closes above this line,” roughly $105,000. A close back below would risk a retest of $100,000; a sustained breakout could extend toward $110,000+.

Historically, Bitcoin has toggled between risk-asset behavior and a haven role. Over the next decade, macro adoption could shift BTC more permanently into a digital safe-haven category. For now, treat it as a momentum play keyed to equity markets and Treasury yields.

Conclusion: Balancing Probability, Discipline, and Diversification

Today’s GAME PLAN underscores three overarching themes:

Probability over Certainty: Even high-conviction setups carry failure risk. Waiting for multi-factor confirmation enhances win rates.
Intermarket Dynamics: Yields, dollar strength, and sector rotations will dictate near-term moves more than headlines.
Patience Pays: Whether monitoring a bull flag in Bitcoin, a breakout in palladium, or earnings reactions in Home Depot, waiting for clear levels reduces emotional bias and trading mistakes.

As Gareth reminded us, “If we get through [6,000], you do have the potential to test the all-time highs once again.” But should the S&P fail and yields spike past 4.74%, reassessing allocations and hedges will be critical. Keep an eye on open‐market flows, tariff developments, and social‐media catalysts—any could trigger fresh rotations. Above all, discipline and probability‐based decision‐making remain the bedrock of consistent trading success.