In this morning’s GAME PLAN show, Gareth Soloway, Chief Market Strategist at Verified Investing, dissected today’s “taco trade,” the implications of the largest options expiration in history, and the technical setups that matter most as we sit just 2.8% below all-time highs on the S&P 500. From Fed stagflation warnings to long-term trend lines dating back to 1929, this article expands on the key themes, adds historical perspective, and offers actionable levels for traders to watch.

1. The Resurgence of the “Taco Trade”

The so-called “taco trade” describes President Trump making aggressive threats—and then backing off when markets react. Gareth noted the pattern extends beyond tariffs on China to recent Iran tensions and the looming TikTok ban:

“Now we’re seeing it on other things—for instance, Iran. … another thing he postponed was the banning of TikTok. The TikTok-ban deadline was just coming up, and he pushed it out another 30 or 90 days or something like that.”

Historically, similar behavior on tariffs led to knee-jerk selloffs in Treasuries and equities, only to reverse when threats were softened. Traders now anticipate the July 7 tariff deadline will simply be “kicked down the road,” removing acute political risk from the market’s immediate horizon. The lesson: eliminate emotion, focus on how these headlines impact price action, and position accordingly.

2. Navigating Triple Witching and the Trillion-Dollar Options Expiration

Today marks the largest options expiration ever—a “triple witching” event combining monthly, quarterly, and other expirations, with roughly a trillion dollars of options set to expire. Gareth warned:

“I never like holding options into expiration. Once you get close, you’re at the whim of institutions, and it’s taken out of your hands.”

Institutions sell 99.9% of options to retail, engineering price pinning to maximize profits. Late-day in the past, traders have seen 30- to 60-minute ramps or collapses driven by institutions deploying capital—selling $10 million of stock to pocket $50 million in option premium differences. To avoid that squeeze, it’s often smarter to exit long-dated options at least a week or two before expiration and focus on defined-risk setups.

3. S&P 500 Futures: Vulnerable Below the Wedge

After a 1% overnight slide—roughly a 60-point drop in futures—the S&P 500 has recovered and now hovers just below its all-time high, about 2.8% away. Gareth pointed out:

“On the daily chart, we’re hovering just below all-time highs. But recall... there’s a wedge pattern... We’ve broken that wedge, which makes the market vulnerable.”

Wedge patterns often resolve with sharp breakdowns back toward key support. Although the “taco trade” relief rallies can push prices higher, the broken wedge warns of potential weakness if fundamental headwinds intensify. Traders should mark the wedge’s upper boundary as a pivot: a clean break above could spark a test of historical highs, while a failure there raises the odds of a deeper retracement.

4. Fed’s Stagflation Base Case and Oil’s Inflationary Push

On Wednesday, the Fed paused rates but revised its projections, accepting rising inflation alongside slowing growth—a classic stagflation scenario. Trump immediately called for 250 basis points of rate cuts, adding pressure to an already complex landscape.

Meanwhile, oil has surged from about $66 a barrel at the end of May, up 24% in June. Rising energy costs feed directly into CPI, heightening inflationary pressures just as the economy shows signs of fatigue. Traders should watch oil’s trend lines closely—any breakout above current highs can amplify consumer price worries and test equity support levels.

5. Lessons from History: 1929 to the Dot-Com Bust

On a logarithmic chart, one can draw a trend line through the 1929 pre-crash high and the dot-com bubble peak. Gareth observed:

“If you think about the 90% decline in the Great Depression or the 60–65% decline in the dot-com bust, do we really think one month of downside is all we’ll get off a powerful trend line like this? I highly doubt it.”

These long-term trend lines act as magnets for both peaks and panic selling. They remind traders that structural market cycles can bring severe corrections. While a retest of all-time highs is possible, the asymmetry—6% upside vs. 30% downside to that trend line—demands selective exposure and strict risk management.

6. Sector and Single-Stock Setups

Defensive Play: Pfizer

Pfizer looks attractive amid defensive positioning. Trading near recent lows and having just broken out of a wedge, the stock offers a 7%-plus dividend yield. For income-focused portfolios, Pfizer’s setup provides an asymmetric risk profile versus more volatile sectors.

Crypto Innovators: Coinbase, Robinhood, Circle

• Coinbase (≈ $306): After the House passed the GENIUS Act stablecoin bill and Coinbase announced blockchain stock-trading plans, cryptos rallied. Key levels:
  • Shortable intraday at $311.50
  • Swing-trade resistance near the down-sloping trend line at $335
• Robinhood: As Coinbase encroaches on stock-trading territory, Robinhood’s up-sloping trend line (currently being tested) could trigger a pullback short.
• Circle (USDC issuer): IPO’d at $31, skyrocketed to $238 (a 500% move, actually 600% with pre-market). At extremes of a potential bubble, a 50% retracement to around $130 is possible, though shares may be hard to borrow.

Consumer Finance: CarMax

Post-earnings, CarMax is up about 10%, leaving a gap fill around $72. Aggressive day traders might look for a short on a retrace to $81.85, but the move lacks the volatility to excite broader interest.

Bitcoin and Altcoins

Bitcoin coils in a wedge:

• Breakdown target: $95,000–$93,000
• Upside breakout: $120,000
  Short term, Bitcoin will likely track the Nasdaq. Most altcoins languish near 52-week lows, with Ethereum flat and Cardano at $0.60.

7. Dollar, Yields, and Precious Metals

• U.S. Dollar: Stuck in a megaphone pattern, bounded by a trend line from March 2020 highs through recent lows. Range-bound for now.
• 10-Year Treasury Yield: Slight breakout higher, but weakening economic data should push yields back down.
• Gold & Silver: Gold sold off on political de-risking; silver’s failed mini-wedge breakout puts a buy level at $34.50.

8. Trading Psychology: Discipline in Uncertainty

With triple witching, political posturing, and Fed-driven stagflation narratives all converging, this is not the time for emotional trading. As Gareth reminds us, “Focus on the charts.” Maintain strict stop losses, size positions in line with market risk, and avoid holding options into expiration. When structural trend lines warn of severe downside, be selective with longs, favor defensive setups, and prioritize capital preservation.

Conclusion

Friday’s combination of the revived “taco trade,” record options expiration, and critical technical thresholds underscores the importance of a disciplined, probabilistic approach. Whether markets pin at key option strikes or break down from long-term trend lines, traders who align multiple factors—political catalysts, institutional dynamics, chart patterns, and historical precedents—will have the edge. Stay vigilant, respect risk, and let the charts guide your decisions.