My Trading Game Plan Revealed - 01/09/2026: Epic Wedge Signals Big Move as S&P Nears 7,000 and Dow Nears 50,000

Good morning and welcome to your daily deep dive into the markets. The latest jobs report came in this morning, showing 50,000 jobs added—slightly below expectations—and an unemployment rate ticking down to 4.4%. While on the surface this might seem like a mixed bag, the market interpreted it as a green light, rallying on the belief that lukewarm data reinforces the case for more rate cuts from the new Federal Reserve chair expected in May.

In this morning's My Trading Game Plan, Gareth Soloway, Chief Market Strategist at Verified Investing, cut through the media narratives to reveal the powerful technical patterns shaping up in the major indices. As the S&P 500 and Dow Jones creep toward monumental psychological numbers, a massive consolidation pattern is squeezing prices, building pressure for a move that could define the market's direction for months to come.

The Psychology of the Big, Round Number

Why do markets seem magnetically drawn to major round numbers like 7,000 on the S&P 500 or 50,000 on the Dow Jones? It’s a phenomenon rooted in human psychology and exploited by institutional players. As Gareth explained, these levels become focal points for both retail and professional traders.

"Historically what we've seen is that the reason why even numbers and institutional money wants to push things to major even numbers and pierce them, number one, you stop out a lot of bears, right? So people that have shorts in their mind, we normally, we're humans, we tend to pick psychologically normal numbers to say, or throw in the towel at."

When an index like the Dow approaches a milestone like 50,000, it becomes a self-fulfilling prophecy. The media latches onto the narrative, creating a frenzy of excitement. Retail investors, driven by FOMO (Fear Of Missing Out), pile in. At the same time, short-sellers who placed their stops just above this round number are forced to buy back their positions, adding fuel to the rally.

This is the perfect environment for institutional money to distribute their positions to the public. They can use the media-driven hype and forced buying from shorts to sell their shares at peak prices.

"The media, you look at CNBC and the rest of them, they'll be having their pom poms out jumping up and down at the 50,000 marker on the Dow. Then the top can be in."

The S&P 500 recently peaked at 6,966, just 34 points shy of 7,000. The Dow came tantalizingly close to 50,000 just days ago. The current market action suggests a final push to pierce these levels, shake out the last of the weak-handed bears, and draw in the last wave of euphoric buyers before a potential major reversal.

Epic Wedges: When Market Pressure Builds

Beneath the surface of this push toward psychological milestones, a powerful technical story is unfolding. The S&P 500 is currently being squeezed within an "epic, epic wedge pattern." A wedge is a consolidation pattern formed by two converging trendlines. As price moves back and forth between these lines, the trading range gets progressively tighter.

Think of it like a coiled spring. The longer the price consolidates and the tighter the range becomes, the more energy is stored. The eventual breakout or breakdown from the wedge is often explosive and can signal a major new trend.

"Remember wedges work like a condensing machine, squeezing price and putting more and more pressure for the eventual breakout or breakdown."

This isn't just any wedge. The upper and lower bounds are part of a massive parallel channel that has defined every major high and low in the market since the COVID bottom in 2020. This adds significant weight to the pattern. A breakdown from this wedge would not just be a minor correction; it could signal a systemic shift in market direction. While a final push to pierce 7,000 is probable, the larger pattern suggests a significant downside resolution could follow later in January.

A Tale of Two Trendlines: Major vs. Minor Analysis

Not all trendlines are created equal. This is a critical concept for traders to understand, and Gareth provided a masterclass this morning using the Nasdaq 100 (QQQ) as a prime example. The QQQ is currently testing a short-term, or "minor," trendline.

"A breakout of this trend line, this is what we would call a minor trend line. This is a major trend line in technical analysis. Now what's the difference-maker here? The difference is time."

A minor trendline connects recent highs or lows over a shorter period—in this case, a few months. A breakout above this line would likely lead to a relatively small move, with the next major resistance being the prior double top. The risk/reward for a long trade here is limited.

Conversely, the Nasdaq also has a "major" trendline providing support, which dates back eight to nine months. A break of a major trendline, which represents a longer-term trend, typically results in a much more significant and sustained move. A break of the Nasdaq's major support trendline could trigger a correction of at least 10%. This illustrates a crucial aspect of probability-based trading: the potential reward for shorting a major trendline break is significantly greater than the potential reward for buying a minor trendline breakout.

The Unseen Power Demand: Nuclear's AI Catalyst

While the indices consolidate, specific sectors are seeing explosive moves. Shares of OKLO and VST surged 18% and 17% respectively this morning. The catalyst? A landmark deal with Meta Platforms to build nuclear reactors to power the tech giant's energy-hungry data centers.

This news highlights a critical bottleneck in the AI revolution that Gareth has been discussing for months: the sheer amount of electricity required.

"You literally don't have enough power to produce the energy in the U.S. or in the world to be able to handle all the data centers… you're seeing again more and more of these companies taking it upon themselves to say, hey, listen, we're buying all these NVIDIA chips. We need to build out enough energy where we can actually power these data centers."

While these are powerful fundamental stories, trading them requires precise technical levels. For traders looking at these high-flyers, Gareth identified specific levels for potential short-term, day-trade-only opportunities:

• VST: A potential short entry exists around the $184 USD to $185 USD level, an area that has served as a key pivot point of support and resistance in the past.
• OKLO (OKLO): The first significant resistance level for a potential shortable retrace is the gap fill at $126 USD.

These are not swing trades or long-term shorts, but rather scalp trades for active traders looking to capitalize on intraday volatility at key technical inflection points.

A Swing Trader's Case Study: The General Motors Setup

For those with a longer time horizon, the chart of General Motors (GM) presents a fascinating swing trade setup. Yesterday, the stock ran directly into a massive, multi-year trendline connecting the highs from 2017 and 2021. Hitting such a significant resistance level alone is noteworthy, but it was accompanied by a powerful negative catalyst.

After the market closed, GM announced a staggering $7.1 billion write-down on its struggling EV division. The combination of hitting a major technical ceiling and a negative fundamental development creates a high-probability setup for a swing short.

So, where could GM be headed? Gareth identified a logical target based on a core principle of technical analysis.

"The odds favor a retrace to what I call the scene of the crime, which was the breakout level, the former breakout level. So in terms of GM here, that would be a move back into this $66 area."

The "$66 USD area" represents the former all-time high that GM broke out from. It is common for a stock to retrace to test a former breakout level, which then acts as support. This provides a clear, logical target for the trade, offering a well-defined risk/reward scenario for swing traders.

Navigating the Commodities Complex

Bitcoin: The world's largest cryptocurrency remains within its macro bear flag pattern. While a short-term "micro" pattern recently led to a successful bullish call, the larger "macro" structure—a downtrend followed by sideways consolidation—still points to an eventual move lower. The trigger for this larger move would be a definitive break of the lower trendline support.

Gold and Silver: Gold is tightly coiled in a wedge pattern, signaling an imminent breakout or breakdown is likely within the next month. Silver, meanwhile, continues to hammer on a major support trendline dating back to November. However, a large bearish reversal candle from the recent highs remains the dominant signal, suggesting the odds favor an eventual breakdown toward the mid-$60s USD or even $60 USD.

Oil and Natural Gas: Crude oil is showing strength, having closed above a key resistance level yesterday. Today's price action will be critical. A second consecutive close above this level would create a "confirmed breakout," potentially sending oil toward the mid-$60s or even $70 USD a barrel. Natural gas, which often lags oil, is currently hammering on a major support level. This could present a buying opportunity, as a breakout in oil could eventually trigger a catch-up rally in natural gas.

Conclusion: The Calm Before the Storm

The market is at a fascinating juncture. The push toward major psychological numbers on the Dow and S&P is creating a sense of euphoria, yet massive technical wedge patterns are signaling that a period of intense pressure is building. This suggests that while a final celebratory push higher is possible, a significant directional move is on the horizon.

By understanding the psychology of the market, distinguishing between major and minor technical patterns, and identifying high-probability setups in individual names, traders can navigate this complex environment. Whether it's a day trade in a hot nuclear stock or a multi-week swing trade in an automotive giant, the principles of probability-based technical analysis provide a clear roadmap for the opportunities and risks that lie ahead.