GAME PLAN REVEALED: 07/30/2025
All eyes are on the Federal Reserve today as traders await the 2:00 PM policy statement that will set the market's tone for the coming weeks. While the morning's GDP report came in strong at 3% growth, beating the 2.5% forecast, savvy market participants understand this number is skewed by trade-war-related import front-running. The real story, as Gareth Soloway, Chief Market Strategist at Verified Investing, detailed in this morning’s GAME PLAN, is written in the charts. The market is flashing significant warning signs, with price action suggesting that institutional players are quietly distributing their positions to an eager retail crowd. Today, we’ll dive deep into these signals, explore key earnings season setups, and reinforce the probability-based mindset that separates successful traders from the rest.
The Market's Whisper: Institutional Distribution Ahead of the Fed
While the S&P 500 continues to hover near its highs, the character of the market has changed. Recent price action reveals a pattern of weakness that seasoned traders recognize as a potential precursor to a pullback. We’re seeing days where the market opens higher on positive news, only to fade throughout the session and close flat or even significantly lower. This is a classic sign of distribution.
"When I see this price action, especially with the VIX starting to go up, it tells me institutional money is starting to exit their positions, and they're essentially unloading into retail, which is still eagerly buying."
This isn't a guess; it's a conclusion drawn from decades of experience. As Gareth noted, this is a pattern he has seen "over and over again through bull markets and through bear markets." The large institutions, or "smart money," can't sell their massive positions all at once without crashing the market. Instead, they sell into strength, feeding shares to enthusiastic retail buyers who are chasing the highs. The S&P 500 is currently pressed against the top of a major parallel channel that extends from the October 2023 lows, a formidable wall of resistance that has already prompted a 19-point sell-off in yesterday's session. With the Federal Reserve's commentary acting as a potential catalyst, this technical resistance becomes even more critical.
A Decisive Shift in the US Dollar
While equities are showing signs of exhaustion, the US Dollar Index (DXY) is signaling a powerful change in character. For months, the dollar has been in a clear downtrend, defined by a series of lower highs. Each rally failed to surpass the previous one, confirming bearish control. Yesterday, that pattern broke.
"Yesterday, we made a higher high. We talked about how that is a change in trend in the US dollar... in the near term, the bias has now gone to a stronger dollar."
This is a pivotal technical development. A higher high breaks the downtrend structure and suggests that the path of least resistance has shifted upwards. While Gareth maintains a long-term view that the dollar will eventually trend lower, the short-term charts are telling a different story. This new strength in the dollar, if it holds post-Fed, will have ripple effects across asset classes. A stronger dollar typically acts as a headwind for multinational corporate profits, commodities like gold and oil, and can tighten global financial conditions. The key level to watch is the former resistance zone, which, if confirmed, will now act as a support floor for any future pullbacks.
Decoding Earnings: The Anatomy of a High-Probability Trade
Earnings season provides a masterclass in market psychology and technical analysis. It’s not just about whether a company beats or misses estimates; it’s about how the stock is positioned heading into the print. Two recent examples from the chip sector, Seagate (STX) and Garmin (GRMN), perfectly illustrate this principle.
Seagate: The Inevitable Pullback
Seagate (STX) reported earnings yesterday after a monstrous 147% vertical run. As Gareth explained, when a stock moves this far, this fast, the odds overwhelmingly favor a "sell the news" reaction, regardless of how good the numbers are. The stock is priced for perfection, and any holders are sitting on massive profits, creating a powerful incentive to sell.
Furthermore, the chart itself was showing signs of waning momentum. The ascent had become a struggle, a sign of distribution where institutions were offloading shares. This nuance was a clear tell for a potential short trade, which Gareth personally took for a profitable overnight gain. This is a prime example of how reading the subtle language of the charts can provide a significant edge.
Garmin: A Live Short Setup
Building on this theme, Gareth identified Garmin (GRMN) as a prime shorting opportunity for the day. The stock closed yesterday at $239.00 and was trading up to $243.00 pre-market on its earnings news. This may seem bullish, but context is everything.
- Parabolic Run: The stock is up approximately 43% since early April, a vertical move that makes it vulnerable to profit-taking.
- Technical Resistance: The pre-market gap-up pushed the price directly into a confluence of resistance, including a key gap fill level and a double top on the daily chart.
- Historical Precedent: As seen with Boeing (BA) yesterday, stocks on big runs have been gapping up on good news only to reverse and sell off hard.
This combination of factors creates a high-probability setup. The educated guess is that Garmin may push a little higher on the open, perhaps to the $246.00-$250.00 area, before sellers take control and push it back towards $235.00 or even $230.00 in the coming days. This is the game plan in action: identifying a vulnerable chart and using a news catalyst as the entry trigger.
Big Tech at a Crossroads
With Meta and Microsoft reporting after the bell, two of the market's most important stocks are facing critical technical tests.
Meta: The Looming Head and Shoulders
Meta's chart is flashing a classic bearish reversal pattern: a head and shoulders top. This pattern consists of a left shoulder, a higher peak (the head), and a right shoulder at a similar level to the left. It signifies a shift in market psychology from buying dips to selling rallies.
Crucially, the pattern has not yet triggered. The trigger is a definitive break below the "neckline," the support level connecting the lows of the pattern. However, its presence, combined with a double top formation, is a significant warning. If Meta sells off on earnings and breaks that neckline, a measured move target points to a potential drop towards the $630.00-$635.00 area. Conversely, a rally that takes out the high of the head (around $748.00) would negate the pattern entirely.
Microsoft: Hitting the Ceiling
Microsoft's chart presents a simpler, yet equally powerful, picture of resistance. The stock has rallied directly into a major descending trendline that has capped every significant advance for over a year.
"Every time we've hit this line, we've had a pretty significant multi-month pullback. And so I would generally assume that we're into this level again, we would see a pullback here on the charts."
History doesn't repeat, but it often rhymes. With the stock at this well-defined ceiling, the probabilities favor a pullback. While there are no guarantees in trading, positioning for a decline when a stock is at such a historically significant resistance level is a logical, probability-based decision.
The Contrarian Play: Why Qualcomm Stands Out
In a sea of over-extended chip stocks, Qualcomm (QCOM) presents a compellingly different picture. While names like AMD and STX are trading at or near all-time highs, Qualcomm is still 43% off its all-time high from a year ago. This is not a story of chasing momentum; it's a setup based on value and technical turnaround.
The chart shows that Qualcomm broke a major downtrend line, pulled back to retest it, and has since been building a solid consolidation base. This is constructive, bullish price action. Unlike its peers, it has room to run. Gareth's analysis points to a bullish bias going into earnings, with a potential pop towards the $176.00-$177.00 resistance area. This highlights a key aspect of superior analysis: finding opportunities not just in what is popular, but in what is technically sound and not yet crowded.
The Trader's Mindset: Probabilities Over Predictions
The most profound lesson from today's GAME PLAN transcends any single chart or trade setup. It’s the core philosophy of trading as a game of probabilities, not a quest for certainty. This mindset allows a trader to hold seemingly contradictory views that are, in fact, perfectly logical. For instance, one can be long-term bullish on an asset like gold or Bitcoin, while simultaneously taking a short position to profit from a probable near-term pullback.
"If in the short term the chart's telling me it's going to go down, am I just going to be an idiot and not step up and short it? ... If it's telling me with a 75% chance it's going to come down, why wouldn't I make money that way? And then when it tells me 75% chance it's going back up, I'll just jump long again."
This is the essence of technical trading. The goal is to interpret the language of the charts and align your capital with the highest probabilities. This approach acknowledges that even a 75% probability means a 25% chance of failure. This understanding fosters discipline in risk management and prevents the emotional decision-making that plagues most market participants. The chart is simply communicating odds, and the trader's job is to act as the interpreter.
Conclusion: Navigating the Fed with a Clear Game Plan
As we head into the Federal Reserve announcement, the market is at a precarious inflection point. The major indices are showing signs of distribution at key resistance, the US Dollar has signaled a bullish trend change, and earnings season is creating massive divergence between individual stocks.
The path forward is not to predict what Jerome Powell will say, but to react to how the market digests his words, using the charts as our guide. Opportunities exist on both the long side (like Qualcomm) and the short side (like Garmin), but they must be chosen with discipline. By focusing on high-probability setups, understanding the underlying psychology of price action, and managing risk with diligence, traders can navigate this volatile environment with the confidence that comes from a well-defined game plan.
