TRADING GAME PLAN REVEALED: S&P 500 Wedge, Dollar Breakdown, and Robinhood Short Levels

In this Monday edition of TRADING GAME PLAN REVEALED, Gareth Soloway, Chief Market Strategist at VerifiedInvesting.com, walks us through Friday’s sharp intraday swings, institutional selling, and the critical technical levels that could define the next major market move. From the S&P 500’s wedge support to dollar breakdown risks, 10-year Treasury yield inflection points, and fresh short setups in newly added S&P 500 members Robinhood and APP, today’s article expands on the key takeaways from Gareth’s morning show—adding historical context, intermarket relationships, and actionable levels for traders.

Friday’s Institutional & Insider Selling

Friday began with optimism as the S&P 500 opened at a new all-time high, buoyed by “three rate cuts penciled in by the Fed into year-end.” But heavy institutional selling quickly reversed the gains.

“We opened sharply higher… then we saw a hard sell-off for the majority of the day. That was institutional selling,” Gareth noted.

Insider selling—CEOs, CFOs, COOs unloading stock—has also reached levels Gareth hasn’t seen in his career. Historically, spikes in insider selling can precede broader market stress, as corporate insiders often have early visibility into slowing revenue or rising costs. While retail “buy-the-dippers” lifted prices late Friday, the question heading into today is whether institutional selling resumes once volume picks up.

Key takeaway for traders: Watch early-day volume. A repeat of Friday’s heavy selling on institutional size could signal a deeper pullback rather than a routine dip-buying opportunity.

S&P 500’s Wedge Support: The Line in the Sand

On the S&P 500 futures chart, Friday’s sell-off bottomed precisely on a long-standing trend line that, if broken, would open the door to accelerated downside. Gareth explained:

“We’ve hit this trend line two, four, probably six times… if we break and confirm below it, then we start to see the downside accelerate.”

This converging “wedge” pattern has defined price action since mid-year. As long as the index holds within this narrowing range, it can chop sideways or grind higher. A decisive break above would probably trigger a short squeeze and a fresh leg up; a confirmed break below would leave the market vulnerable to a swift correction.

Historical context: Wedge patterns often resolve with sharp moves once price squeezes near the apex. In 2018 and 2022, similar multi-month wedges preceded 10–15% swings in the S&P 500. Traders should:

Define risk: place stops just outside the wedge boundary.
Position scale-in: a small hedge on a breakdown; add on confirmation.
Monitor related markets (yields and dollar) for confirmation of broader risk-on or risk-off sentiment.

Tech Divergence—QQQ, SMH, Broadcom & Microsoft

While the S&P 500 flirted with new highs, tech underperformed:

QQQ failed to make a new all-time high on Friday’s gap up.
The SMH semiconductor ETF didn’t set fresh highs.
NVIDIA sits nearly 10% off its peak.

“That continues to show a little weakness in the tech sector,” Gareth observed, noting a slow rotation back into cyclicals and value stocks.

Broadcom (AVGO) illustrates this divergence. Gareth had pinpointed a short between $350 and $353 early Friday: the stock gapped up, hit that zone, then sold off $20. Institutional profit-taking was obvious. Microsoft (MSFT) on its last earnings gap higher exhibited identical behavior and has been one of the weakest names since.

Trading edge:

Look for gap-up stocks that reverse into key trend or pivot zones—these “reverse gaps” often flag heavy institutional selling.
Use them as short candidates for both day-trade and swing-trade setups.
Confirm with sector breadth: if other semis or software names lag, the pattern gains conviction.

U.S. Dollar Breakdown & Precious Markets

Friday’s action also flashed warning signs in the U.S. dollar. The DXY has been riding a trend line that dates back to early 2008, when the financial crisis began. Over the past week, that support has broken, and a bear flag pattern is forming. Gareth warned:

“If this level breaks around 96.50 and confirms, you have a major breakdown on the U.S. dollar.”

A sustained dollar decline typically boosts gold, commodities, and some emerging-market assets, but also signals potential economic stress at home. Historically, multi-year dollar breaks in 2014–15 and 2020 coincided with periods of Fed easing against economic weakness.

Implications:

Gold—traditionally inversely correlated—could resume an uptrend over the next 6–18 months, though interim pullbacks are possible.
Bitcoin often tracks dollar moves, providing either a risk-on signal or, in sharp corrections, a volatile head-fake.
Commodity sectors (energy, materials) may react positively to dollar weakness, but also reflect global demand concerns.

10-Year Treasury Yield at Crucial Support

On the bond front, the 10-year Treasury yield is back at its long-term support trend line after a bounce on Friday. Gareth pointed out:

“If 4.05% breaks, our next target is 3.92%–3.82%.”

Yield moves are a double-edged sword. Lower yields are generally bullish for equities—cheaper capital—but when driven by a weakening economy, the sentiment flip can be swift. In past cycles (2001, 2008), yield cuts and plunging rates marked the onset of bear markets, as investors feared the Fed was behind the curve.

Key levels to watch:

Resistance: 4.05%—failure here suggests the downtrend continues.
Support zone: 3.92%–3.82%—holds here and yields may stabilize; breaks, and equities could come under renewed pressure.

Short Setups in Newly Added S&P 500 Stocks: Robinhood & APP

Two stocks that began Monday with extra attention are Robinhood Markets (HOOD) and APP, both officially added to the S&P 500.

Robinhood (HOOD)

ROBINHOOD jumped ~10% pre-market but remains below its all-time high of $118. Gareth draws a classic “retrace to the scene of the crime”:

“If it pushes up to about $113 today, there’s a fantastic shortable… day-trade and swing-trade level.”

Trend-line resistance at $113 offers a clear, defined short entry with tight stops above. The psychology is simple: a broken support trend line now acts as resistance.

APP

Also added to the S&P 500, APP is trading at a new high—about $13 above its prior peak. By connecting recent high pivots, Gareth identifies the only logical resistance zone: $535–$540 (around $540). He notes:

“This one’s a little trickier; Robinhood’s very simple. When you get into uncharted territory, you don’t know how it could be…”

Traders venturing into fresh-high names must manage risk tightly. A short against momentum requires an agile exit plan should buyers overwhelm sellers.

Conclusion & What To Watch

Friday’s dramatic sell-off—driven by both institutional and insider selling—tested critical technical levels across equities, currencies, and bonds. Key themes for the week:

S&P 500 wedge support at the converging trend line
Tech underperformance in QQQ, SMH, Broadcom, MSFT
U.S. dollar break of a 2008-era support trend line
10-year yield key level at 4.05%, support at 3.92%–3.82%
Short setups in Robinhood (resistance $113) and APP ($535–$540)

As the Fed rate-cut conversation ramps up (currently priced as likely within 1.5 weeks), remember: equity bear markets often begin when easing starts. Monitor volume for institutional flows, respect trend-line levels for entries and exits, and maintain position-sizing discipline. Whether you’re trading gaps, wedges, or yield inflections, a fact-based, technical approach remains your best edge.