GAME PLAN REVEALED: Jackson Hole, Key Trend Lines & Confirmation Signals

The market finds itself in a state of suspended animation. After a volatile week defined by conflicting inflation data, investors are now casting a nervous eye toward the end of the week and the annual Jackson Hole Economic Symposium. In this morning's GAME PLAN show, Gareth Soloway, Chief Market Strategist at Verified Investing, broke down the critical technical levels holding the market in check, the long-term implications of currency shifts, and the single most important signal traders must wait for before acting on a potential breakdown.

This week is not just about waiting for a single speech; it's about understanding the immense technical pressure building up under the surface of the market. From key indices to mega-cap tech leaders and even Bitcoin, multiple assets are testing trend lines that have defined their direction for months.

The Jackson Hole Standoff

Before diving into the charts, it's crucial to understand the macroeconomic environment creating the current market chop. All eyes are on Jackson Hole, Wyoming, where Federal Reserve officials, led by Chair Jerome Powell, will convene. Powell's speech on Friday is the single biggest scheduled catalyst of the week, and institutional money is unlikely to make any major moves until he provides guidance.

"Sometimes that can mean that we have a slower early portion of the week as the markets and big investors just look towards that Jackson Hole speech on Friday," Gareth noted.

This anticipatory pause is amplified by two factors. First, it's late August, a period historically known for light trading volume as many traders are on vacation, which can lead to exaggerated price swings on low conviction. Second, last week's economic data sent a confusing message. While the Consumer Price Index (CPI) suggested inflation was moderating, the Producer Price Index (PPI) two days later showed a spike, reigniting concerns. This has left the market oscillating between pricing in two or three Fed rate cuts by year-end, a debate Powell is expected to address. Until then, the market is likely to remain in a holding pattern, reacting to retail earnings reports while waiting for its primary directional cue.

Key Indices at Critical Inflection Points

While the macro story is one of waiting, the technical picture is one of immediate tension. Both the S&P 500 and the Nasdaq 100 are pressed against trend lines that could dictate their next major move.

For the S&P 500, a powerful ascending trend line has become the focal point. This line connects the significant low from October 2023, the bottom of the corrective move in August 2024, and the gap-up from July 31st. After serving as support for nearly a year, this line is now acting as formidable resistance. The index tagged this line last Wednesday before selling off into Friday's options expiration. This is not a minor level; it's a technically pure trend line that has proven its significance repeatedly. Its ability to cap the recent rally is a major watchpoint for the bulls.

The Nasdaq 100 (QQQ), meanwhile, is contained within a more short-term parallel channel. Price has respected this channel for months, rallying to the top end and pulling back to the bottom. Currently, the QQQ is backing off the upper boundary once again. While this is normal behavior within an uptrend, Gareth identified the key level that would signal a more significant problem: a break below approximately 364 on the QQQ. Such a break would take the index out of its orderly uptrend and could initiate a deeper correction.

The Slow Unraveling of the Dollar

Zooming out from the daily price action reveals a multi-year trend that could have profound long-term consequences: the weakening of the U.S. Dollar. By drawing a parallel channel from the dollar's peak in September 2022, Gareth demonstrated a clear and consistent downtrend. Despite several powerful rallies, the dollar has been making a series of lower highs and lower lows.

This trend is starkly illustrated by the Euro vs. USD chart. The Euro has been in a downtrend against the dollar since the 2008 financial crisis. However, it has recently broken out of this 15+ year trend line. This is a monumental technical event.

"What it tells us is that you have now generally changed the direction that the Euro will go against the dollar. The dollar again will weaken over time against the Euro," Gareth explained.

He was quick to add crucial context to the popular narrative of "de-dollarization." This is not an overnight event. "When a reserve currency loses that status, it literally can take fully decades to happen before it loses that point." This breakout is not a signal for a sudden dollar collapse but rather the confirmation of a slow, generational shift in currency dynamics that investors must be aware of for long-term strategic positioning.

The Confirmation Signal: A Trader’s Most Powerful Ally

Throughout this morning’s analysis, one theme was paramount: the difference between a break and a confirmed break. This distinction is what separates professional, probability-based trading from speculative gambling. Several key stocks are providing a masterclass in this concept right now.

Nvidia (NVDA): On Friday, the market leader broke below a critical ascending trend line that originated from the April 7th market lows. A break of such a powerful trend is a major warning sign. However, Gareth stressed the need for confirmation. "The confirmation signal confirms a breakdown versus the speculation that it could just be a whip because of Friday's options expiration." Institutions often use the chaos of options expiration to push prices below key levels to trigger stops, only to "whip" the price back the other way. A confirming close below Friday's low (around 178) would validate the breakdown as real.

Tesla (TSLA): Tesla offers a perfect example of a failed breakout due to a lack of confirmation. The stock recently pushed above a multi-month wedge pattern, a move that excited many bulls. However, it never achieved a daily close above the key breakout level of $346.40. It pierced the level intraday but was rejected. Now, the price has fallen back to test the breakout line from below. If it fails and falls back inside the wedge, the breakout is considered a "fake out," and the odds would then favor a move down to the bottom of the pattern around $306. This price action underscores why chasing breakouts without confirmation is a low-probability strategy.

Microsoft's Nine-Year Itch: A Historical Parallel

In a fascinating piece of historical analysis, Gareth presented a compelling case for a potential multi-year cycle high in Microsoft (MSFT). Like Nvidia, Microsoft recently broke a key uptrend line and printed a nasty reversal candle on its last earnings report. But the most compelling evidence comes from looking at its market cycles.

The current bull market in Microsoft began in earnest in 2016. That makes the current run nine years long. Gareth then went back to the dot-com era. "The uptrend in Microsoft began in 1991 and concluded in the year 2000. How many years of upside was that? Nine years."

This nine-year cycle parallel is not a coincidence; it reflects long-term patterns of market expansion and investor psychology. This doesn't mean Microsoft is set to crash. As Gareth showed, even after the 2000 peak, the stock experienced monster bounces on its way down. What it does suggest is that the primary upward momentum of this cycle may be complete, and the character of the stock could shift from a buy-and-hold leader to a more volatile, two-sided trading vehicle for years to come.

Bitcoin at the Brink

The cryptocurrency market is also facing a moment of truth. Bitcoin has formed a clear double top and has been under selling pressure since. Today, it is testing a critical trend line connecting the lows from the April "Liberation Day" sell-off.

"This is a big deal today, folks," Gareth warned. "A trend line that goes back to the April lows...is at risk of breaking."

Just as with the equity charts, a close below this line requires confirmation to be considered a true breakdown. If confirmed, the first level of support sits at a previous pivot around $112,000 USD. However, a confirmed break of a trend line this significant could open the door to a much larger correction, potentially targeting the psychological $100,000 USD level.

Ethereum, while not at its all-time high, has pulled back and is heading toward its first major support zone around $4,065 to $4,075 USD. This area, a former major high, should offer some support, but its ability to hold will be critical for the altcoin market.

Conclusion: Patience and Probabilities in a Market on Edge

This week is setting up to be a pivotal one. The market is caught between the quiet of late summer and the tension of major assets testing make-or-break technical levels. From the S&P 500 to Nvidia and Bitcoin, trend lines that have guided price for months are now under threat.

The ultimate catalyst may be Jerome Powell's words on Friday, but the charts are already telling a story of indecision and pressure. For traders, the key takeaway is the discipline of patience. Chasing unconfirmed breaks is a recipe for getting caught in market "whips." The highest probability trades emerge not when a level first breaks, but when the market confirms that the break is real. By identifying these key levels in advance and waiting for confirmation, traders can navigate the coming volatility with a clear, logical, and probability-based game plan.