GAME PLAN REVEALED: 08/20/2025

The market has begun to show cracks. After a period of relentless strength, key resistance levels have held firm, and the initial signs of a breakdown are now visible. As discussed in this morning's GAME PLAN, Gareth Soloway, Chief Market Strategist at Verified Investing, highlighted the critical technical levels that will determine whether this is a minor, healthy correction or the beginning of a more significant market decline.

The narrative for the past week has been one of caution, with major indices and leading stocks testing formidable resistance. Now, that caution is being validated by price action. This article will expand on the key themes from today's show, providing deeper context on the S&P 500 and Nasdaq support levels, the warning shot fired by NVIDIA, and actionable trade setups in stocks reacting to earnings news.

The Market's "Scene of the Crime" Rejection

To understand where the market is headed, we must first appreciate where it has been. The S&P 500 recently provided a textbook example of a classic technical pattern that Gareth often refers to as returning to the "scene of the crime." A major support trendline, which held from the lows of October 2023 through August 2024, was decisively broken during the "Liberation Day" sell-off. After that break, the market staged a powerful rally, returning directly to that same broken trendline, which now acted as resistance.

"For those of you that are new to technical analysis, this is one of my favorite plays," Gareth explained. "When you have a trend line and you stay above it, okay, that's fine, you use it as support. Once it breaks, you look for retraces and short those retraces or sell into them. And that is again, exactly what we've experienced right here."

This rejection is significant because it confirms the trendline's new role as a ceiling. The sellers who took control when the line first broke have shown up again to defend it. With this resistance confirmed, the focus now shifts to the nearest level of support. A new, shorter-term trendline has formed, connecting the lows from late May, late June, and early August. This line currently sits at approximately 6,330 on the S&P 500. This is now the market's most important battleground.

The Probability of a Breakdown: A Technical Deep Dive

The impending test of the 6,330 support level on the S&P 500 isn't just another touchpoint; it's a critical event from a probability standpoint. This will be the fourth time the market has tested this specific trendline. In technical analysis, support and resistance levels are not impenetrable walls; they are zones of supply and demand that weaken with each successive test.

"What we know in technical analysis is that every time we hit a trend line, it weakens slightly," Gareth noted. "One, two, three, and this would be four. I've told you this before, but what are the probabilities of a break on the fourth hit of a trend line? And the answer is it's 50/50."

A 50/50 probability is essentially a coin flip, meaning the market is at a true decision point. However, the probabilities shift dramatically with subsequent tests. Should the market bounce off 6,330 and then return for a fifth or sixth test, the odds of a breakdown increase substantially. This principle is crucial for risk management. While a bounce is possible on this fourth touch, traders must be aware that the integrity of this support is diminishing.

The Nasdaq's Trigger for a 10% Correction

The tech-heavy Nasdaq 100 is exhibiting a similar, yet distinct, pattern. It has been trading within a well-defined parallel channel, with its support trendline mirroring that of the S&P 500, connecting the same key lows from May, June, and August 1st. That critical support level for the QQQ ETF comes in around $563.50.

Gareth was clear about the implications of this level: it is the dividing line between a minor pullback and a major correction. A bounce from $563.50 would constitute a healthy, 3-4% correction from the all-time highs, likely bringing buyers back into the market. However, a confirmed break below this level would signal a much more significant shift in market character.

"If we break this trend line on the QQQ that's around 563.50, then you're talking about a much bigger corrective move that in my opinion could come all the way down to about 536 on the Nasdaq 100 QQQ," he stated.

This provides traders with a clear, objective signal. The price action at this specific level will offer vital clues about the market's next major directional move, removing guesswork and allowing for a data-driven response.

When the Generals Fall: NVIDIA's Warning Shot

For weeks, Gareth has highlighted the steep upsloping trendline on NVIDIA as a key barometer for the health of the entire market. As a mega-cap leader, NVIDIA's price action often serves as a leading indicator for broader market sentiment. That indicator is now flashing red.

The trendline, originating from the April 7th lows, was tested multiple times. After the seventh touch, it finally broke. The market attempted a rescue, but the slope of the trendline was too aggressive to recapture. Once the recapture failed, the sellers took definitive control.

"We talked about how this would be where the markets start to have those sell-offs like we saw yesterday and potentially in the future here," Gareth reminded viewers. "And I do think Nvidia is going to go lower."

With earnings on the horizon next week, traders should be watching two key downside levels for potential bounces:

• First Support: A minor level at $173.60, which represents a confluence of a high pivot and a gap fill. This could offer a day trading opportunity.
• Second Support: A more significant level at $167.00, marking another gap fill and a previous pivot high. This is a higher-probability zone for a day trade bounce.

The breakdown in a market leader like NVIDIA, along with a similar breakdown in Bitcoin, adds significant weight to the bearish case and suggests the market is more vulnerable than it has been at any point since the April lows.

Navigating Earnings Volatility: Setups in Target and Palantir

Earnings season provides a surge of volatility, creating both risk and opportunity. Today's show highlighted several key movers, with clear levels for potential trades.

Target (TGT): The retailer took a significant hit this morning for two primary reasons. First, they missed on earnings. Second, and perhaps more subtly, the market reacted negatively to the news that the current COO would be promoted to CEO. Investors, hoping for fresh leadership to turn the struggling company around, viewed the internal promotion as a signal that major changes were unlikely.

This confluence of negative catalysts validated a pre-existing technical pattern: a bear flag. The stock is now approaching a key day trade level at the double bottom of $87.50. For longer-term investors, a more attractive swing trade entry point lies much lower, at a multi-decade trendline from the 2009 lows, which comes in around $75.00 a share.

Palantir (PLTR): After a massive run, Palantir has seen a sharp 17% correction from its highs. For nimble traders, this pullback is creating a high-probability bounce setup. A confluence of two key trendlines creates a support zone between $150.00 and $148.00. Gareth noted that a bounce of $5.00 to $10.00 from this zone would be reasonable. It's critical to understand this is a short-term trade setup, not necessarily a long-term bottom, and stops must be used.

The Trader's Edge: Why Small Moves Are a Trap

Not all earnings movers are created equal. Lowe's (LOW) reported solid earnings and saw a small pop, but Gareth used it as a teaching moment on what not to trade.

"You don't want to focus in on things that aren't moving because what we as day traders look for when we're counter-trend trading... we want to see such a big drop that emotion has taken over," he advised.

The goal of a counter-trend day trader is to capitalize on emotional extremes—panic selling or euphoric buying. A stock that is only up or down a few percent, like Lowe's, does not exhibit the kind of panic or greed that creates high-probability reversal setups. The opportunity lies in stocks that have made a "big move," which is always relative to that specific stock's typical volatility. A 5% move in Apple is massive, while a 20% move in a smaller name like La-Z-Boy (which has a day trade level at $28.00) is what creates the emotional overshoot that traders can profit from.

Conclusion: Vigilance at the Precipice

The market stands at a critical inflection point. The initial breakdown from key resistance is confirmed, and the focus now shifts entirely to the support trendlines on the S&P 500 (6,330) and the Nasdaq 100 ($563.50). The breakdown of market generals like NVIDIA and Bitcoin serves as a serious warning that this pullback may have more teeth than previous dips.

The question of whether this is a minor 3-4% correction or a more substantial 10%+ decline will be answered by how the market behaves at these precise levels. By avoiding emotional bias and focusing on the charts and probabilities, traders can navigate this uncertain environment with a clear and logical game plan.