GAME PLAN REVEALED: Market Resistance, Earnings Paradox & Crypto Signals

After a whirlwind week of key economic data, including CPI and PPI reports, the market finds itself at a fascinating and precarious juncture. Earnings season is in full swing, but a curious pattern is emerging: companies are reporting strong results, yet their stock prices are struggling to advance. Last night's Netflix report was a perfect case study. As Gareth Soloway, Chief Market strategist at Verified Investing, detailed in this morning's GAME PLAN, the market is grappling with a confluence of heavy technical resistance, overextended valuations, and nuanced economic signals that demand a disciplined, chart-based approach.

This isn't a time for hope or hype. It's a time for probabilities, patterns, and a deep understanding of the technical landscape.

A Market Grinding Against a Technical Ceiling

While the day-to-day price action might feel like a slow, upward grind, the bigger picture on the major indices reveals a market pressing against a formidable wall of resistance. This is not just one trendline, but a confluence of multiple, significant levels that raises the probability of a stall or reversal.

On the S&P 500, Gareth has been tracking what he calls "the three horsemen"—a series of major resistance trendlines that have defined the upper boundary of the market's advance. Compounding this is a more recent, steeper trendline connecting the lows of April 7th and June 23rd. The market recently broke below this line, and while it wasn't a confirmed breakdown, the subsequent rally has returned to test the underside of this very line, which has now flipped from support to resistance.

"Look at where the high of this candle went right back to that trend line, but it stayed below," Gareth pointed out, highlighting the precision with which the market is respecting these levels. This creates a scenario where the market could continue a slow, arduous climb, but the potential for a significant upside "rip" is limited by this dense technical traffic overhead.

The story on the Nasdaq is even more compelling. Using a parallel channel tool, a massive structure becomes visible, connecting the COVID low of 2020 with the bear market low of 2022. When this channel is extended upward, the top line perfectly pegged the 2021 bull market high and the 2024 high. Today, the Nasdaq is right back at the top of this multi-year channel.

When two major indices like the S&P 500 and the Nasdaq simultaneously arrive at such critical, long-term resistance points, it sends a powerful message. As Gareth concluded, the probabilities shift significantly: "It tells me again, that there should be... a high probability is that the markets... are nearer a top than a bottom." He estimates a 70% to 80% probability that the market is close to a significant inflection point.

The Earnings Paradox: When Good News Isn't Good Enough

This earnings season is serving up a masterclass in market psychology, perfectly illustrating the concept that price is not always a direct reflection of performance. We are repeatedly seeing companies beat earnings expectations, only for their stocks to falter.

Netflix is the poster child for this phenomenon. The company reported a great quarter, and the stock initially popped after hours to around $1,307. However, the gains quickly evaporated, and the stock fell to as low as $1,234. Why? "The stock again is just too high," Gareth explained. This has been a recurring theme. Stocks rallied so aggressively off the "liberation day lows" that even stellar earnings are not enough to entice new buyers at these elevated levels; instead, they become an opportunity for existing holders to take profits.

GE Aerospace provided another textbook example. The company delivered strong earnings, gapping up above a key resistance trendline at the open. But the stock couldn't hold those gains and sold off, closing the day with a small loss. This wasn't a catastrophic sell-off, but it was a powerful validation of the overhead resistance and a clear signal of just how overbought many of these names have become.

A fascinating tidbit from Netflix’s report was the impact of currency fluctuations. The company explicitly attributed some of its strong performance to the weakening U.S. dollar. When a multinational company like Netflix earns revenue in foreign currencies (Euros, Yen, etc.), a weaker dollar means those foreign earnings convert back into more U.S. dollars, directly boosting the bottom line.

"That's not that their business is is amazingly well, it's that they're getting currency rewards essentially," Gareth noted. This is a critical distinction for investors to make. It highlights the importance of monitoring the U.S. Dollar Index (DXY) as a potential tailwind or headwind for corporate profits, separating true operational strength from favorable macroeconomic conditions.

The Critical Lesson of Confirmation

One of the most valuable, and often costly, lessons in trading is understanding the principle of confirmation. A price moving above a resistance line or below a support line does not, in itself, constitute a valid breakout or breakdown. It must be confirmed.

The U.S. Dollar Index (DXY) chart offers a perfect real-time example. The dollar recently broke above a down-sloping trendline, an event that might cause an amateur trader to immediately jump into a long position. However, the subsequent price action has been weak and choppy, failing to show any strong upward momentum. It never confirmed the breakout.

"When you don't confirm above a level, it tells us this line is still not really the greatest line in the sand or the greatest wall," Gareth taught. An unconfirmed level is like a weak fence—it might offer temporary support, but it's not a brick wall. Had the dollar confirmed with a strong secondary candle close above the line, that level would have solidified into major support, increasing the odds of a move higher. Without confirmation, it remains minor support with, at best, 50/50 odds of holding. This discipline of waiting for confirmation is what separates professional traders from the crowd and helps them avoid costly "fakeouts."

Unpacking Individual Stock Setups

Beyond the broad market, specific earnings reports are creating unique and actionable technical patterns.

American Express (AXP): After reporting a solid earnings beat ($4.08 vs. $3.86 expected), American Express is trading slightly higher. However, it is approaching a massive resistance zone between $330 and $335. This isn't just one level; it's a confluence of two powerful technical factors: a horizontal resistance line marking a potential double top, and the retest of a major broken support trendline from beneath. A retest of a broken trendline is often called a "retrace to the scene of the crime" and represents a high-probability area for sellers to re-emerge. This confluence makes the $330-$335 zone a prime area to watch for a potential short trade.

3M (MMM): 3M, which is up on its earnings, is displaying a classic bullish reversal pattern: an Inverse Head and Shoulders. This pattern, composed of a left shoulder, a lower head, and a right shoulder, signals a potential trend change from down to up. The pattern was confirmed when the price broke above the "neckline" around $154.95. To find the potential target, traders can measure the distance from the low of the head to the neckline and project that distance upward from the breakout point. In this case, the measured move gives a calculated upside target of $186. This provides a clear roadmap for the potential trajectory of the stock over the coming weeks or months.

Crypto's Technical Test

The cryptocurrency markets are also at a pivotal moment, with key assets running into significant, technically-defined resistance levels.

Bitcoin (BTC): The dominant signal on the Bitcoin chart is a bearish reversal candle from a few days ago known as a "topping tail." This candle, characterized by a long upper wick and a small body, shows that buyers pushed the price higher during the session, but sellers overwhelmed them, forcing the price to close near its lows. "In textbooks, this is what we call a topping tail. It is a reversal bearish signal until proven otherwise," Gareth stated. The bearish signal remains valid unless and until Bitcoin can achieve a daily close above the high of that candle.

XRP (XRP): XRP has been on an absolutely incredible tear, rallying 92% from its June 23rd low. However, this parabolic move has slammed directly into a multi-year resistance trendline connecting the major highs from 2021 and January 2025. The fact that such an explosive rally halted precisely at this technical line underscores its significance. A pullback from here would be natural and expected, with the first major support zone around the $2.95 to $3.00 area.

Ethereum (ETH): Ethereum has also had a strong move but is approaching its own major resistance trendline connecting the 2021 and 2024 highs. This level sits just under $4,000, creating a clear upside target and a probable zone of resistance where a pullback could occur.

Commodities Corner: Gold's Stubbornness and Oil's Pattern

In the commodities space, gold continues to be incredibly impressive. Despite a "risk-on" mood in equities, gold is stubbornly holding its ground within a large consolidation pattern. "The way it's acting is just continued credence that it is going higher longer term," Gareth remarked. Its resilience suggests that even if it sees a corrective flush lower, it would likely be a major buying opportunity for a continuation of its bull run.

Meanwhile, crude oil remains coiled within a bear flag pattern. This pattern consists of a sharp down move (the flagpole) followed by a period of choppy, sideways-to-upward consolidation (the flag). The probabilities favor an eventual breakdown from this pattern, with the first major downside target sitting at $63.75.

Conclusion: Navigating an Inflection Point

The market is sending clear signals, but they are complex. We have strong earnings clashing with overbought conditions, and major indices pressing against a ceiling of multi-year resistance. It's a Friday with options expiration, which can add to volatility, but the larger forces at play are technical and psychological.

The key takeaways are clear: probabilities, not predictions, should guide every decision. The confluence of resistance in the S&P 500 and Nasdaq suggests upside is limited and risk is elevated. The "good news, bad reaction" theme in earnings highlights the danger of chasing overextended stocks. And the principles of confirmation, pattern recognition, and measured moves provide a logical framework for identifying and managing trades.

As Gareth always emphasizes, the goal is to trade based on what the charts are saying, free from bias or narrative. "No BS, just charts, which equal probabilities." In a market at such a critical inflection point, that philosophy is more valuable than ever.