My Trading Game Plan Revealed - 01/07/2026: S&P Wedge, Memory Chip Hype, Roblox Trade Setup

In this morning's "My Trading Game Plan," Gareth Soloway, Chief Market Strategist at Verified Investing, navigated a complex market landscape defined by tightening consolidations, sector-specific euphoria, and a neutral economic backdrop. While yesterday's rally was notable for its breadth beyond the mega-caps, today’s session is more subdued, revealing critical technical patterns and psychological traps that traders must understand.

This article delves deeper into the key themes from the show, exploring the immense pressure building in the S&P 500, the institutional psychology behind the "super cycle" narrative in memory stocks, and the crucial difference between macro and micro chart patterns.

The Great Market Squeeze

The S&P 500 is currently caught in a powerful technical formation. A look at the daily chart reveals price action becoming increasingly compressed between two significant trend lines. The upper band of a parallel channel is providing firm resistance, while a rising trendline connecting the lows from April, November, December, and early January is providing support. This is creating a classic wedge pattern.

As price moves deeper into the apex of this wedge, volatility compresses and pressure builds. Gareth provided a vivid analogy to illustrate the mechanics of this pattern:

"The best example of this would be like if you had a tube of toothpaste, right, and the cap was on and you were squeezing it, right, it's getting tighter and building pressure, building pressure… if you squeeze hard enough, what happens? The tube of toothpaste, it shoots right out and just explodes everywhere. And that's essentially what you're watching for here in the S&P."

This compression cannot last forever. The market will be forced to make a decisive move, either breaking out to the upside or breaking down to the downside. The resulting move is often powerful and sustained, making the identification of these patterns critical for anticipating the market's next major leg.

Adding another layer to this dynamic is a subtle divergence between the major indices. While the S&P 500 has made new all-time highs and continues to consolidate, the tech-heavy Nasdaq 100 has not. In fact, the Nasdaq is showing signs of short-term weakness, pulling back after tagging a key descending trendline connecting its all-time high with subsequent peaks. This suggests that money may be rotating out of the mega-cap tech names that have led the market for so long and into other sectors, which could have significant implications for portfolio strategy.

Decoding the "Super Cycle" Hype

Yesterday's market action was dominated by an explosive rally in memory chip stocks like Sandisk, Micron, and Seagate (STX). The catalyst was commentary from NVIDIA CEO Jensen Huang at the CES conference in Las Vegas, who spoke glowingly about the demand for memory. While the move was powerful, Gareth urged extreme caution, suggesting it could be a "blow-off top" and warning against a particularly seductive narrative that often appears near market peaks: the "super cycle."

Institutional players are masters of narrative. When they need to unload large positions after a massive run-up, they need a large pool of eager buyers. By introducing compelling, emotionally charged terms into the mainstream media, they can generate the excitement necessary to create that exit liquidity.

"Think about this. If I'm an institution and I want to get more and more investors to jump in on something that's already up 2, 3, 400% in the last 12 months, I come up with a term like super cycle… Think about it. Go three steps ahead. What could they be trying to do? Exit liquidity, perhaps?"

This is a classic psychological trap. Phrases like "super cycle" or "this time is different" are designed to override a retail investor's logic and encourage them to chase performance at dangerously elevated valuations. The key takeaway is to remain objective and analyze the underlying charts and fundamentals, rather than getting swept up in the hype.

A Tale of Two Semiconductors: Micron vs. NVIDIA

A closer look at the charts of Micron and NVIDIA reveals a fascinating and cautionary tale. Micron, caught up in the memory stock frenzy, surged yesterday to tag a major, multi-month trendline connecting the highs from October and November 2025. This is a significant technical resistance level where sellers are likely to emerge.

Gareth pointed out a compelling historical pattern on Micron's chart. After a run to $200 USD, the stock experienced a 10% pullback. Later, after reaching a higher price of $260 USD, it endured a much larger 25% pullback. This leads to a logical question: now that the stock is even more extended, could a potential pullback from this current resistance be even larger, perhaps as much as 40%? A pullback of that magnitude would interestingly take the price right back to a major prior pivot point, demonstrating the beautiful symmetry often found in technical analysis.

It's also crucial to understand the product. As Gareth noted, memory chips are essentially a commodity. While technology improves, it is not a proprietary, game-changing product in the same way NVIDIA's AI chips are. This makes the "super cycle" narrative even more suspect.

Meanwhile, NVIDIA's chart tells a different story. Despite its CEO being the source of the bullish commentary that sent memory stocks soaring, NVIDIA's own stock was negative yesterday and has been down for both days he has spoken. This is a significant bearish divergence. When the leader of a company known for its bullish influence speaks and its own stock fails to rally, it signals underlying weakness and is a red flag for the near term.

An Economy in Limbo

The market's indecisive price action is happening against a backdrop of equally neutral economic data. This morning's ADP private sector employment report showed 41,000 jobs were added in December, slightly missing expectations of 49,000.

This number is not strong enough to signal robust economic growth, nor is it weak enough to signal an impending recession. The economy appears to be "stuck in the mud." This puts the Federal Reserve in a difficult position. Without clear signs of the economy "hemorrhaging jobs," the Fed has little incentive to rush into cutting interest rates. This neutral stance from the central bank contributes to the market's current state of limbo, reinforcing the consolidation seen in the S&P 500 chart.

Finding Opportunity Amidst the Noise: The Roblox Setup

While many sectors show signs of being overextended, disciplined chart analysis can still uncover high-probability opportunities. One such setup Gareth highlighted is in Roblox (RBLX).

After a massive run, Roblox has experienced a significant correction, falling from a high of $142 USD in October to its current price around $75 USD—a nearly 50% drawdown. The stock has now pulled back to a critical technical level: the breakout point from its February 2025 high. This is what technical analysts call a "retrace to the scene of the crime."

When a stock breaks out above a major resistance level, that old resistance often becomes new support. A pullback to test this level provides a logical, lower-risk entry point for a potential bounce. While there are no guarantees, this type of setup offers a high-probability opportunity for at least a 10% to 15% rebound in the coming days or weeks.

Macro vs. Micro: A Bitcoin Case Study

Bitcoin's recent price action provides an excellent lesson in understanding different timeframes in technical analysis. While Gareth was recently bullish on Bitcoin in the short term, identifying a bullish micro-pattern that led to a profitable move up, he remains cautious on the bigger picture.

When you zoom out on the Bitcoin chart, the dominant, or "macro," pattern is a bear flag. This is a bearish consolidation pattern that typically resolves to the downside. The recent rally was a "micro" bullish pattern playing out within that larger bearish structure.

Understanding this distinction is vital. A trader can successfully play a short-term bounce (a micro pattern) while still being fully aware that the longer-term trend (the macro pattern) remains bearish. The key level to watch now is the lower trendline of the bear flag. A definitive break below that support would signal the macro pattern is taking over and could initiate a much larger move to the downside.

The Unbiased Truth of the Charts

Ultimately, navigating today's market requires a commitment to objective analysis over emotional bias. The precious metals sector offers a stark reminder of this principle. Silver experienced a significant pullback today, down over 5%. This weakness was foreshadowed by a powerful bearish reversal candle on the chart a few days ago.

As Gareth explained, it's tempting to let our personal holdings or desires influence our analysis. One might be a long-term bull on silver, but that doesn't change what the chart is signaling in the short term.

"The worst thing we can do as investors or traders is ignore the chart… If I ignore the chart and I just go with my guts… and I play a game versus charts, I'll lose every time… The charts, they have no bias. They have no agenda. They just are what they are. And that's why the charts can give us the best chance."

This commitment to logic and probability is what separates consistently profitable traders from the crowd. The charts provide an unbiased scorecard that, while not perfect, offers the highest probability of success over time.

Conclusion: A Market at an Inflection Point

The market is coiled and building energy for its next major move. The S&P 500 is squeezing into the apex of a major wedge pattern, signaling an explosive move is on the horizon. The semiconductor sector is flashing warning signs of a potential blow-off top driven by hype, while the broader economy remains in a neutral state, offering little direction for Fed policy.

In this environment, discipline is paramount. By understanding the psychology behind market narratives, identifying high-probability technical setups like the one in Roblox, and respecting the unbiased truth of the charts, traders can position themselves to capitalize on the opportunities that emerge while effectively managing risk. The key is to remain patient, logical, and let the charts be your guide.