GAME PLAN REVEALED: S&P Bear Flag, Insider Selling & Top Trade Levels

Happy Friday and welcome to the end of another trading week. The market has been sending a series of complex and often contradictory signals. On the surface, pre-market futures hint at strength, yet the closing bell frequently tells a different story. In this morning's GAME PLAN show, Gareth Soloway, Chief Market Strategist at Verified Investing, peeled back the layers of this market action to reveal a critical divergence between what retail investors are doing and how large institutions are positioning themselves.

Beneath the daily noise, significant warning signs are flashing. From a persistent pattern of intraday fading to a level of insider selling not seen since the eve of the 2008 financial crisis, the data is painting a cautious picture. This edition of GAME PLAN REVEALED will dive deep into these signals, explore the powerful technical patterns taking shape, and break down the probability-based trading setups that can help investors navigate this treacherous environment.

A Tale of Two Tapes: Retail Buying Meets Institutional Selling

One of the most telling market dynamics Gareth highlighted is a pattern that has repeated itself on seven of the last nine trading days: the market opens higher, only to see those gains evaporate as the day progresses, often closing in negative territory. Yesterday was a prime example, with S&P futures pointing to a 40-point gain that ultimately fizzled into a 5-point loss by the close.

This isn't random noise; it's a classic sign of institutional distribution. As Gareth explained, “ultimately [this] signals… institutions unloading in the early portion of the day after the gap up in the market. So you have retail investors who are very bullish right now that are continuing to put money in the market and institutions lurking to dump into that.”

This creates a dangerous environment for unsuspecting investors who are chasing morning strength. They are essentially providing the exit liquidity for larger, more informed players who are quietly reducing their exposure. While this pattern doesn't guarantee a market top has been made, it is a significant behavioral warning sign that the character of the market is shifting from accumulation to distribution.

Compounding this concern is another, more ominous data point: the sheer volume of selling by corporate insiders. "I have never seen, well, maybe not never, but maybe before 2008, that was the last time there was this much massive unloading in from insiders and CEOs," Gareth noted. Insiders—the executives and directors with the most intimate knowledge of their companies' health and prospects—are selling their own stock at an alarming rate. Historically, such widespread insider distribution has been a prescient indicator of future market weakness. When the people who run the companies are cashing out, it's a signal that every investor should take seriously.

The S&P 500's Ominous Bear Flag

The daily chart of the S&P 500 provides a clear technical picture that corroborates the bearish underlying data. The index is currently consolidating in a pattern known as a bear flag, which carries a high probability of resolving to the downside.

To understand this pattern, we must look at the price action that preceded it. After a powerful rally, the S&P 500 gapped up on the back of strong earnings from Microsoft and Meta, tagging a major parallel resistance line that connects the pivot lows of October 2023 and April 2025. The market was immediately rejected from this level, forming a massive reversal candle. This was followed by more selling on the non-farm payrolls data.

Since that sharp drop, the market has been floating sideways to slightly up. In technical analysis, this specific sequence is textbook. "When you have a sharp down move in price and then you see something like this, in technical analysis, that is known as an in spirit of bear flag," Gareth explained. The sharp drop acts as the "flagpole," and the subsequent sideways consolidation forms the "flag."

The critical takeaway is the probability associated with this pattern. Gareth assigns a “65 to 70% right now that it will play out to the downside.” This isn't a guarantee, but in a world of market uncertainty, a 65-70% probability is a significant edge that disciplined traders must respect.

The Trader's Edge: Thinking in Probabilities, Not Absolutes

The concept of probability is the cornerstone of Gareth's entire trading philosophy and the most important lesson for any aspiring investor. The market is not a place of certainties. Successful trading is not about being right 100% of the time; it's about consistently putting your capital to work in situations where the odds are heavily in your favor.

"I am here to only talk about what the probabilities are telling us and it's important for us all to understand that it is only probabilities and not certainties," Gareth emphasized. This mindset shifts the goal from trying to predict the future to identifying and executing on high-probability setups.

Gareth laid out the mathematical reality of a professional trader: “As long as I say to myself, okay, let's only take our trades that are 75 to 80% success rate, what I know if I always take those, if I take 100 of them, if I take a thousand, if I take 100,000 of those trades, I will win seven to eight times out of every 10.”

This framework embraces losses as a simple cost of doing business. If you win on eight trades and lose on two, you will be incredibly profitable over time, provided you manage your risk correctly. It’s why any trader who claims to never lose is an immediate red flag. Humility and an understanding of probability are the hallmarks of a true market professional.

Big Tech at a Tipping Point

The mega-cap technology stocks that have led this market are now at critical technical junctures. Their next moves could determine the fate of the broader indices.

Microsoft (MSFT): Microsoft’s chart is a masterclass in technical analysis. Last week, the stock gapped up on earnings directly into the upper boundary of a parallel channel, presenting what Gareth identified as an 80-85% probability short trade. The stock promptly pulled back. Now, it has fallen to a new "game time" level: a major uptrend line that has supported the stock for months. As of yesterday, it hit the line again. A bounce could occur, but a definitive break below this trend line would be a major bearish development, signaling a much deeper correction is likely underway.
NVIDIA (NVDA): Like Microsoft, NVIDIA is clinging to a crucial trend line. This line has served as the backbone of its incredible uptrend. The stock is technically "safe" as long as it remains above this level. However, with each test, the potential for a break increases. A close below this trend line would be the first technical signal that the stock's parabolic run is over and a significant pullback has begun.
Meta (META): Meta also gapped to all-time highs on its earnings report but stalled almost immediately at a long-term trend line. While it has held up better than some of its peers, the $790 level now stands as formidable resistance. The key question is whether it can gather the strength to re-attack that high or if the recent fade is the start of a larger move down.

Actionable Setups in an Earnings-Driven Market

Earnings season is winding down, but it continues to produce massive volatility and actionable trading opportunities. Gareth highlighted several key stocks to watch:

The Beaten Down

The Trade Desk (TTD): TTD plummeted over 30% after reporting weak guidance and the resignation of its CFO—a major red flag. For day traders, Gareth identified two key support levels: a gap fill at $56.50 and a major support zone at $54.25. A bounce is probable from the lower level, but this is strictly a day trade. A potential swing trade entry is much lower, around the $40.00 mark, reinforcing the idea that weak stocks get weaker in a market correction.
Twilio (TWLO): Another stock getting hammered, Twilio has already breached its initial support. The next level to watch for a potential day trade bounce is $96.60. A longer-term swing trade setup could emerge around $90.50, where a major up-sloping trend line sits.
Pinterest (PINS): After an initial flush down on earnings yesterday, Pinterest has a well-defined support zone between $31.90 and $30.50. This entire area should provide a floor for the stock in the near term.
Under Armour (UAA): A former market darling, Under Armour is getting crushed again. A classic double bottom support level at $4.80 presents a clear day trade opportunity if the stock continues its decline.

The High-Fliers

SoundHound AI (SOUN): SOUN is gapping up significantly on better-than-expected earnings. Instead of chasing a stock that is already up over 20%, the disciplined approach is to wait for it to hit a high-probability resistance level. For SOUN, that level is the gap fill at $15.35. If the stock rallies to that price during the day, it becomes a potential short trade for a quick 50 to 75-cent pullback.
Block (SQ): Block rallied in the after-hours yesterday but has already faded from its highs. The key resistance level to watch for a potential short trade is $85.25, a level defined by multiple prior pivots.
MP Materials (MP): MP is on a vertical run and is rallying again pre-market. While there is no precise level in this uncharted territory, its price action is reminiscent of Microsoft's earnings gap-up. This type of parabolic move is a prime candidate for a significant fade during the day.

Nuanced Lessons in Charting

The Angle of the Flag Matters: Using Silver's chart as an example, he explained that not all bear flags are created equal. The probability of success is highest when the flagpole is at a 90-degree angle to the flag. As the flag becomes more vertical, the odds of a downside resolution decrease. This nuance helps traders distinguish between A+ setups and lower-probability ones.
Support Wears Out with More Tests: Using Natural Gas, which is chopping at a key support level, Gareth explained how probabilities shift with each test. The first few hits on support are high-probability bounces. The fourth hit becomes roughly 50/50. A fifth hit shifts the odds to favor a breakdown (60-65%), and a sixth hit increases those breakdown odds even further (70-75%). This knowledge allows a trader to anticipate when a level is likely to hold versus when it is likely to break.

Conclusion: Navigating with Discipline and Data

The market is sending clear warning signs. The persistent pattern of institutional selling into retail-driven morning rallies, combined with the highest level of insider selling since before the 2008 crash, demands caution. The S&P 500's technical picture, defined by a high-probability bear flag, aligns perfectly with this bearish data.

However, a cautious outlook does not mean paralysis. It means shifting your mindset to one of discipline, patience, and probability. It means avoiding the temptation to chase parabolic moves and instead waiting for price to come to pre-defined levels where the odds shift dramatically in your favor. Whether it's shorting a high-flier like SoundHound at a specific resistance or buying a beaten-down name like The Trade Desk at a major support zone, the strategy is the same: let the setup come to you. By focusing on the data, respecting the technicals, and trading with a probabilistic edge, investors can confidently navigate whatever comes next.