GAME PLAN REVEALED: Stagflation Fears, Market Sell-Off & Key Levels

The market’s placid summer grind has come to an abrupt and violent end. Following a week of intense earnings and a hawkish Federal Reserve, this morning’s weak jobs report was the final straw, sending stocks sharply lower and bond yields plummeting. In this morning’s GAME PLAN show, Gareth Soloway, Chief Market Strategist at Verified Investing, cut through the noise to explain precisely why this seemingly “good news” for rates is actually a major warning sign for the economy and a catalyst for the sell-off we’re witnessing.

This isn’t just another down day; it’s the culmination of multiple red flags that have been flashing for weeks. From critical technical breakdowns to unprecedented insider selling, the charts have been telling a story that the mainstream narrative has ignored. Today, we’ll dive deep into the data, the charts, and the institutional psychology driving this market shift.

The Stagflation Specter: When Bad News is Bad News

The headline numbers from this morning’s jobs report paint a picture of a rapidly cooling labor market. Non-Farm Payrolls came in at just 73,000, well below the 106,000 forecast. The unemployment rate ticked up to 4.20%, and more subtle indicators revealed even deeper weakness. The labor force participation rate fell, signaling that more people have become discouraged and stopped looking for work entirely.

Perhaps most concerning was the U6 underemployment rate, which jumped from 7.7% to 7.9%. As Gareth explained, this number is a crucial, often overlooked, measure of economic health.

“U6 should almost be the one we go by because again, think about it… if you're looking for a job and all you could find is part-time work, you're barely getting by in this world… that's really basically unemployed, to be fair.”

Ordinarily, weak economic data would send yields lower and stocks higher on the expectation of Fed rate cuts. But the market’s negative reaction today highlights a critical nuance. As Gareth noted, “The market wants low rates as long as the economy stays strong. If the rates are going lower because the economy is starting to slow, that is an issue because that affects corporate profits and consumer spending.”

This is the crux of the market’s current fear. Combined with the hotter-than-expected PCE inflation data from earlier this week, the weakening economy raises the dreaded risk of stagflation—a toxic environment of stagnant growth and high inflation. For corporations, this means squeezed margins and lower profits, a scenario that stock valuations have not been priced for.

The Anatomy of a Sell-Off: Institutional Dumping in Plain Sight

For weeks, savvy traders have noticed a disturbing pattern: the market gaps up on positive sentiment in the pre-market, only to see those gains evaporate as institutional players sell into the strength. This pattern repeated itself yesterday, even after mega-cap giants Microsoft and Meta reported strong earnings. The market’s inability to rally on good news was a major tell.

“That's institutional dumping. 101, guys. It is just what it is,” Gareth stated bluntly. “They're basically waiting for the markets to open because that's when the most volume is in the market, meaning it's the most liquidity for them to unload into that group. And again we know retail has been FOMOing into this market believing it will never stop going up.”

This behavior is a classic distribution tactic. Large institutions, needing massive volume to exit their positions without crashing the price, use the influx of retail buy orders at the market open as exit liquidity. The charts were screaming caution, but the fear of missing out kept many investors buying at precisely the wrong time.

The Cliff's Edge: Critical Breakdowns in the S&P 500 and Nasdaq

The price action has now confirmed the institutional selling with major technical breakdowns on the daily charts. The S&P 500 broke its last line of defense—the uptrend line connecting the April 7th lows. As Gareth warned in previous sessions, this was the critical level holding the market up.

“We are now hanging off the cliff,” he explained. “We're hanging off the cliff here because we don't have any more support levels below… We broke that last line. Now that line becomes resistance.”

Making matters worse, the sell-off began from a perfect tag of a parallel channel resistance line drawn from the October 2023 and April 2025 lows. The market opened precisely at this technical ceiling and was rejected violently, confirming the power of the pattern.

The tech-heavy Nasdaq 100 is flashing an even more urgent warning signal. Yesterday, the QQQ formed a “reversal engulfing candle,” a powerful bearish pattern where the trading day opens higher than the previous day’s high but closes below the previous day’s low.

“That is again in technical analysis one of the holy grails of reversal signals. It's even more powerful than a topping tail,” Gareth emphasized. “If a topping tail has a 75% chance of working out, I would give an engulfing reversal candle probably an 80 to 85% probability of playing out to the downside, meaning a market potential short-term market top.”

The Canary in the Coal Mine? Unprecedented Insider Selling

While the price action is alarming, a look at the data on Verified Investing’s homepage reveals what might be the most significant warning sign of all: unprecedented insider selling. Typically, insider selling slows to a trickle during earnings season due to mandatory quiet periods. This quarter has been a shocking exception.

“Holy cow, the insider selling. This is super, super rare,” Gareth exclaimed while showing the data. “This is massive insider selling going on especially for during earning season… I wouldn't be surprised if we look back at this insider selling and say, wow, that was the indicator.”

This data suggests that corporate insiders at companies not currently in a blackout window are unloading shares at a frantic pace. These are the people with the most intimate knowledge of their business and industry trends. Their aggressive selling, even as the market was making new highs, is a five-alarm fire that investors should not ignore.

Navigating the Earnings Minefield: Amazon, Apple, and Coinbase

The market sell-off is creating carnage among individual stocks, particularly those that have recently reported earnings.

Amazon (AMZN): The stock is dropping sharply after its cloud business, the primary driver of its high valuation, came in weaker than expected. For active traders, Gareth identified a potential day trade support zone between $212 and the gap fill at $208. For a longer-term swing trade, he is staying patient, watching a major upsloping trend line connecting the 2022 and April 2025 lows, which sits significantly lower.
Apple (AAPL): In a rare sign of strength, Apple is up today. However, this is a classic case of beating low expectations. The stock has been a notable underperformer, so the bar for a positive reaction was low. Gareth sees no immediate trade unless it rallies to the gap fill resistance at $224 or dumps to support around $195.
Coinbase (COIN): The crypto exchange is getting “absolutely annihilated,” providing a monster gain for members of the Smart Money Stocks & ETFs service who were short the stock. The chart was, in Gareth’s words, “ridiculous beyond belief.” While it’s finding some temporary pre-market support, that level has been hit multiple times. Applying his “door theory,” Gareth expects it to break and is targeting the next major support at the gap fill around $308.

Cross-Asset Check: Signals from Bitcoin, Gold, and Oil

The turmoil isn't confined to equities. Key signals are emerging across other asset classes.

Bitcoin (BTC): After a recent close below support, the chart is at a crossroads. Gareth stressed that the recent topping tail pattern takes precedence over what many retail traders mistakenly see as a bull flag. The key question now is how Bitcoin will behave. “Does this then help Bitcoin or does the stock market following affect Bitcoin? And and again, I'm not here to tell you that I know the answer to that. These are things that even I watch for in the charts.”
Gold & Silver: Gold is getting a predictable pop on the weak jobs data and falling dollar, but it’s running into a wall of resistance around $3400. Silver is up but lagging, as its industrial component makes it vulnerable to economic growth fears.
Oil: Crude is being propped up by geopolitical chatter, but Gareth believes the fundamentals will win out. If the U.S. economy weakens substantially, the drop in consumption will overwhelm other factors and send oil lower, just as it did during the flare-up between Israel and Iran.

Conclusion: Trading the Charts in a Whiplash Market

In the span of 48 hours, the market has gone from pricing in only one rate cut for the year to now expecting multiple cuts starting in September. This whiplash demonstrates the futility of trying to predict Federal Reserve policy or trade the headlines. The only reliable guide is the chart.

The evidence is clear: stagflation fears are rising, major technical levels have been breached, institutional players are selling, and insiders are dumping stock at a historic rate. While this doesn't guarantee a straight-line move down—sharp bear market rallies are common—the probabilities have decisively shifted to the downside.

By focusing on the technicals, identifying high-probability patterns like the Nasdaq’s engulfing candle, and respecting key support and resistance levels, traders can navigate this treacherous environment with a clear, logical framework, free from the emotional chaos of the crowd.