My Trading Game Plan Revealed - 01/21/2026: Tariffs and Rising Yields Fuel Market Volatility, Nasdaq Breaks Down

Global markets are currently held in a state of suspended animation, waiting on every word coming out of Davos. With the President delivering a critical speech regarding the Greenland situation and potential tariffs on eight European nations, volatility is bubbling just beneath the surface. In this morning’s episode of My Trading Game Plan, Gareth Soloway, Chief Market Strategist at VerifiedInvesting.com, dissected the geopolitical tensions, the bond market’s warning signals, and the critical technical breakdowns occurring in major indices.

As traders navigate this landscape, the distinction between emotional reaction and logical technical analysis becomes the dividing line between profit and loss.

The Macro Standoff: Geopolitics and the "Presidential Put"

The driving force of today’s market action is not earnings, but rather the geopolitical standoff involving Greenland. The market is hypersensitive to the President's rhetoric regarding tariffs. We witnessed a breakdown yesterday, and futures remained flat to negative early this morning, paralyzed by uncertainty.

However, seasoned market watchers know that political figures often gauge their success by the performance of the equity markets. Gareth noted a phenomenon often referred to as the "Presidential Put"—a variation of the "Fed Put"—where policy softens when markets react too negatively.

"If there's one thing I know about the president… he does pay attention to the stock market. I'm sure he saw the reaction in the bond market yesterday… and I'm sure he saw the resulting selloff in the stock market, and he's not a fan of that."

This dynamic creates a push-and-pull effect. If the rhetoric on tariffs hardens, the market likely drops. If there is a softening of tone, we see a relief rally, which was hinted at in the pre-market action as S&P futures ticked higher.

The Bond Market Warning

While equity traders watch the headlines, the bond market is screaming a warning. The 10-year Treasury yield has confirmed a massive "bull flag" pattern, signaling that rates are heading higher, not lower. This move is exacerbated by international flows. A major pension fund from Denmark announced it was dumping U.S. Treasuries—a direct response to the diplomatic tensions.

This is a critical development for the global economy. When foreign entities dump U.S. debt, yields spike. Higher yields translate directly to higher borrowing costs for the average consumer, impacting mortgage rates, credit cards, and auto loans. This tightening of financial conditions acts as a natural brake on the stock market, regardless of corporate earnings.

Index Technicals: Confirmed vs. Unconfirmed Breakdowns

One of the most vital lessons from today’s analysis is the concept of "confirmation" in technical analysis. A breakdown occurs when a price closes below a key support level. However, a confirmed breakdown requires a second consecutive close below that level. This distinction drastically changes the probabilities of a trade.

The S&P 500: The Shot Across the Bow

The S&P 500 experienced a significant sell-off yesterday, dropping over 2%. Technically, the index broke the white trend line stemming from the "Liberation Sell-off" lows of April 2025. This trend line has guided the market for months, and breaking it is significant.

However, as of this morning, this breakdown is unconfirmed. The market is waiting to see where price action closes today. If the S&P 500 can rally back above that trend line, yesterday’s move could be a "whipsaw" or a bear trap. If it closes below again, the probability of further downside increases significantly.

The Nasdaq 100: A Confirmed Break

In contrast to the S&P, the Nasdaq 100 (QQQ) is in a more precarious position. The tech-heavy index has already logged two consecutive closes below its key support trend line.

"The Nasdaq has a confirmed breakdown to it… Overall, we've got to respect the chart. And the chart again tells us that this uptrend in the NASDAQ 100 has now been confirmed as a breakdown."

For traders, this signals a shift in strategy. Long positions become riskier, and bounces are viewed as selling opportunities rather than buying opportunities. Gareth identified a potential technical bounce level at 600 on the QQQ, but emphasized this would likely be a day trade setup only, not a swing trade, given the damaged technical structure.

The Dollar and the Shift in Safe Havens

A fascinating anomaly is occurring in the currency markets. Historically, during times of geopolitical strife and global uncertainty, the U.S. Dollar (DXY) acts as the ultimate safe haven, rallying as investors flee riskier assets. However, in the wake of the tariff threats against European nations, the dollar has been falling.

This weakness aligns with a longer-term technical pattern: a massive bear flag on the DXY. This formation suggests a potential break of the major uptrend dating back to the financial crisis of 2008-2009.

"We're seeing a switch or a changing of the guard here… usually in times of uncertainty, global uncertainty, the dollar goes up as a safe haven asset. In the latest move here, we're seeing the dollar going down."

While "de-dollarization" is a slow, multi-decade process, the current price action suggests that global central banks and investors are diversifying away from the dollar, with gold being a primary beneficiary.

Stock Specifics: Earnings and Extremes

Volatility brings opportunity, particularly when stocks react emotionally to earnings or reach extreme technical extensions.

Netflix: The Gap Fill Target

Netflix shares took a hit following earnings, dropping sharply. For technical traders, catching a falling knife requires precise levels. Gareth identified a trend line going back to 2022 that connects multiple pivot lows. This line intersects around the $80 level, making a pierce of $80 a potential area for a day trade bounce.

However, for swing traders looking for a more substantial entry, the charts point lower. There is a significant gap fill waiting just below $69. Gap fills act as magnets for price action, and a move to this level would represent a high-probability entry point for a longer-term trade.

Micron: The 500% Runner

On the opposite end of the spectrum is Micron. The stock has been a retail darling, surging an incredible 500% since the lows of April 2025. Currently trading around $372.75, the stock is showing signs of exhaustion.

Yesterday’s candle formed a "topping tail"—a classic distribution signal where buyers push the price up, but sellers overwhelm them by the close, leaving a long wick at the top of the candle. While the stock is gapping up slightly today, unless it closes above the high of that topping tail, the signal remains bearish. This suggests the momentum fueled by zero-day options activity may be running out of steam.

Apple: The Oversold Bounce

Apple provides a textbook example of mean reversion. After a parallel channel short trade worked to perfection from the $285 level, the stock has now dropped for approximately seven consecutive weeks.

The stock has now reached the midpoint of that parallel channel, coinciding with a previous pivot low around the $246 area.

"A 50% draw down in the price almost in a vertical move based on the parallel right to the midpoint of the parallel and a secondary pivot… probability favors a bounce on Apple here."

While the long-term trend may be damaged, a relief bounce of $5 to $15 is highly probable from these oversold levels. This illustrates the nuance of trading: one can be bearish on a stock's long-term prospect but still identify profitable long setups on a short-term basis.

The "Widowmaker" Strikes: Natural Gas

Perhaps the most dramatic move in the market this week belongs to Natural Gas, a commodity often dubbed "The Widowmaker" for its ability to destroy trading accounts.

In just three trading days, Natural Gas has exploded upward by 60%, trading around $4.23. This move was triggered by a perfect storm—literally and figuratively. A massive winter storm system is heading toward the Plains and Northeast, coinciding with a market that was heavily short.

"Traders probably were overshort natural gas down there, and they basically are getting squeezed… I would never have been short at those lows. Obviously, that's not the way I trade. I look to buy support, not short down at support."

This short squeeze highlights the danger of chasing momentum to the downside. However, after a 60% vertical move, the risk/reward now shifts. Resistance levels near $4.23 suggest a pullback is due, potentially back toward the $3.75 area as the short squeeze abates and the weather event passes.

Gold, Silver, and Oil: Diverging Paths

The commodities complex is showing divergence, offering clues to market sentiment.

Gold: Remains robustly strong, acting as the true safe haven amidst dollar weakness. The technicals suggest a potential move toward the upper end of its parallel channel, with a target as high as $5,000 per ounce.

Silver: In contrast, silver is struggling. It has not confirmed the same strength as gold and is trading near the high end of a bearish parallel channel. This divergence—gold rising while silver stalls—often occurs when industrial demand is questionable but fear-based buying drives gold.

Oil: Crude oil continues to look bullish, currently breaking out. Gareth provided a fundamental backdrop for this technical view: inflation adjustment. Oil is trading at price levels seen in 2015. When adjusting for the massive inflation of the currency supply over the last decade, the "real" price of oil should likely be closer to $80 per barrel. This fundamental valuation floor supports the technical breakout.

Bitcoin: The 50/50 Coin Toss

Bitcoin finds itself in a similar technical position to the S&P 500. It has closed below a key trend line but has not yet confirmed that breakdown with a second daily close below the level.

This is a critical juncture for crypto traders. When a breakdown is unconfirmed, the odds of a recovery versus a collapse are roughly 50/50. However, if Bitcoin confirms the breakdown by closing below support again today, the probability of a genuine downtrend spikes to roughly 75%.

"Do we just close below could it be a whip out or did we actually confirm a breakdown here… once you confirm those odds shoot up to about 75% that it's a real breakdown."

Traders must watch the daily close carefully. A recapture of the trend line saves the bullish thesis, while a confirmation opens the door to lower price targets.

Conclusion: Discipline in the Face of Noise

As we move through this trading week, the noise from Davos and political headlines will remain loud. However, the charts provide a roadmap that cuts through the rhetoric.

The divergence between the S&P 500 and the Nasdaq, the warning signs in the bond market, and the extreme moves in commodities like Natural Gas all point to a market at a turning point. By focusing on confirmed vs. unconfirmed breakdowns and waiting for price to reach high-probability levels—like the gap fill on Netflix or the parallel midpoint on Apple—traders can navigate this volatility with confidence.

Remember, the market is a game of probabilities. There are no certainties, only edges. By aligning technical factors and managing risk, you place the probabilities in your favor, regardless of what is said on a podium in Davos.