My Trading Game Plan Revealed - 02/06/2026: AI CapEx Paradox, Job Cuts and Bitcoin-Led Market Selloff

Following the dramatic volatility witnessed in yesterday's session, markets opened Friday attempting to find their footing. With technology stocks leading the decline and Bitcoin experiencing a flash crash to $60,000, investors are navigating a landscape riddled with mixed signals. In this morning’s My Trading Game Plan, Gareth Soloway, Chief Market Strategist at VerifiedInvesting.com, dissected the chaotic price action, analyzing the disconnect between massive corporate spending and a weakening labor market.

The AI CapEx Paradox and Economic Reality

The driving force behind much of the recent market anxiety stems from a startling divergence between corporate expenditure and economic health. Amazon’s earnings report served as a catalyst for this realization. While the earnings themselves were acceptable, the guidance was weak, and the capital expenditure (CapEx) numbers were staggering. Amazon announced a projected spend of $200 billion for 2026. When combined with the other "Magnificent Seven" companies, the total projected spend exceeds $1 trillion.

This massive injection of capital into the AI sector creates a distorted view of the broader economy. While GDP figures might show a robust 5% growth rate, Gareth argues this data is "faulty" because it is heavily skewed by this niche sector investment. The average consumer and the broader labor market are not feeling the benefits of this AI boom. In fact, the data suggests the opposite.

The release of the Challenger job cuts report painted a grim picture, revealing the highest number of January job cuts since 2009—the height of the financial crisis. With 108,000 jobs lost in January 2026 alone, and jobless claims ticking upward, the narrative of a "soft landing" is being severely tested.

"This is faulty because a majority of us don't feel that in the AI sector, right? It's very niche at this point. But bottom line is markets are beginning to be concerned about jobs growth."

This creates a precarious environment for equity valuations. Markets have justified sky-high multiples based on the assumption of continued earnings growth and a resilient consumer. However, if the economy is spinning toward a recession—indicated by the deterioration in labor data—earnings estimates will need to come down. The massive CapEx spending by companies like Amazon and Alphabet ($170 billion) will eat into near-term margins, and if the return on investment doesn't materialize quickly, stock prices have a long way to fall to align with reality.

Technical Damage: The "Scene of the Crime"

From a technical perspective, the S&P 500 has suffered significant structural damage. Gareth highlighted a concept he refers to as the "scene of the crime" retrace. The index recently broke a long-standing support trendline connecting lows from April. After breaking down, price action rallied back up to test the underside of this broken trendline.

In technical analysis, broken support becomes resistance. This retest allows trapped longs to exit at breakeven and invites bears to initiate short positions. The rejection off this level confirms the bearish thesis. While the markets are seeing a bounce today, the technical structure suggests this is merely a relief rally before the next leg lower.

The Nasdaq shows a similar, perhaps more concerning, pattern. The index has been lagging behind Bitcoin, which Gareth views as a leading indicator for risk assets. The Nasdaq put in its high on October 29, 2025, shortly after Bitcoin topped out. Since then, it has failed to break new highs and has broken key trendline support.

"Classic case of breakdown with a retrace, support becoming resistance… I still think we're going lower on the NASDAQ in the next week, likely down to about 21,900."

The path of least resistance remains to the downside. Unless the S&P 500 can reclaim the breakdown zone and close above it, rallies should be viewed with skepticism. The projection for the Nasdaq includes a near-term target of 21,900, with a longer-term potential to revisit the 20,000 level.

Bitcoin: The Canary in the Coal Mine

One of the most compelling arguments presented in today’s analysis is the role of Bitcoin as a leading indicator for the broader stock market. Historically, Bitcoin moves first, reacting to liquidity conditions and risk appetite before equities follow suit.

Gareth noted that Bitcoin topped on October 6, 2025, weeks before the Nasdaq followed suit. Recently, Bitcoin led the de-risking event, crashing to $60,000 in a panic-induced selloff. This move presaged the weakness we are now seeing in the Nasdaq and S&P 500.

However, for the astute trader, panic creates opportunity. The volume on Bitcoin during yesterday's drop was the highest seen since August 2024. In technical analysis, massive volume spikes during a selloff often indicate a "washout"—a moment where weak hands capitulate, transferring assets to strong hands. This capitulation often marks a temporary bottom.

"You want to see panic. How do you see panic? … When people panic and price drops this much, obviously, there's way more volume in the market."

Based on this volume signal, Gareth anticipates a sharp technical bounce in Bitcoin, potentially targeting the $75,000 to $77,000 range over the coming weeks. However, this bullish view is strictly short-term. The longer-term chart damage suggests a risk of Bitcoin eventually trading as low as $35,000 over the next 6 to 12 months. This dichotomy between short-term opportunity and long-term risk highlights the importance of timeframe in trading strategy.

The Bond Market Signal: Safety or Recession?

The 10-year Treasury yield provides another critical piece of the puzzle. Yields plummeted yesterday as investors fled equities and piled into bonds for safety. Typically, lower yields are viewed as positive for growth stocks and housing. However, the context of the move matters immensely.

If yields are falling because investors fear a recession and massive job losses—as suggested by the Challenger data—then lower rates are not a bullish signal for stocks. They are a warning siren.

"If yields are going lower because the economy is spinning in towards a recession, that's not going to be good… earnings probably aren't growing."

The 10-year yield is currently bouncing off a former resistance level that has flipped to support. Traders must watch this level closely. A breakdown below this support zone would confirm that the bond market is pricing in a significant economic contraction. This would force a re-evaluation of equity valuations, particularly for companies trading at high multiples like Palantir and the semiconductor sector.

Silver's Identity Crisis and Volatility

The price action in silver perfectly illustrates the dangers of "FOMO" (Fear Of Missing Out) and crowd psychology. Silver recently experienced an explosive move upward, driven by narratives of it reaching $200 or even $1,000 per ounce. This speculation transformed silver from a safe-haven asset into a high-beta "risk-on" trade.

When the market de-risked yesterday, silver was treated like a tech stock or a crypto altcoin, dumping violently. The metal traded in an $11 range in a single session, dropping as low as $64 before bouncing back to $75. This level of volatility is historic.

"It creates the greed aspect that takes something from a kind of a gold trade, which is more [of a] safe haven asset to a risk-on trade."

For silver to regain its status as a defensive asset, the speculative "tourists" who bought the top need to be washed out. Technically, Gareth maintains a long-term retrace target of $50 to $54. This zone represents a confluence of historical trendlines dating back to the 1979 and 2011 highs. Just as the S&P 500 retraced to the "scene of the crime," silver is likely to test this breakout point before establishing a sustainable long-term uptrend.

Strategic Opportunities in a Volatile Market

Despite the bearish macro backdrop, volatility creates specific setups for disciplined traders. Gareth outlined several key levels to watch:

Amazon (AMZN)

With the stock down nearly 10% following its earnings report and trading around $203, Amazon is approaching a high-probability technical level. The target is a gap fill at $193.25. This level represents a precise area where price previously jumped, leaving a vacuum that the market is now seeking to fill.

Roblox (RBLX)

After a pop on earnings, Roblox has pulled back significantly. While not a short at current levels due to squeeze risk, it becomes attractive as a long entry if it fills the gap down to approximately $60. This disciplined approach—waiting for the price to come to the level rather than chasing the move—is the hallmark of professional trading.

Oracle (ORCL)

Oracle represents a contrarian "value" play in the tech sector. The stock has been beaten down as investors worry about its debt load and the threat of AI rendering legacy software irrelevant. However, the technicals have become "so bad they're good," suggesting the selling is overdone relative to the company's actual cash flow and market position.

Ethereum (ETH)

Like Bitcoin, Ethereum has suffered a massive drop, falling from $3,000 to $1,700 in roughly a week. The major accumulation zone for long-term minded traders sits between $1,500 and $1,600. This zone aligns with the lows from the 2022 bear market and the COVID crash trendlines.

The Psychology of the "Easy Score"

A recurring theme in today's analysis was the danger of overconfidence. Whether it was investors piling into silver at the highs or traders assuming tech stocks only go up, the market has a way of punishing hubris.

"There's no such thing as an easy score. You think something's an easy score. That's always when I take my biggest losses. It's the overconfidence."

The recent flush in crypto and silver serves as a painful reminder that when a trade feels like a "no-brainer," it is often the most dangerous time to be involved. Successful trading requires a constant awareness of risk and the humility to accept that the market can remain irrational longer than you can remain solvent.

The panic selling seen yesterday in Bitcoin, where volume hit multi-month highs, is the inverse of this greed. Just as extreme greed marks tops, extreme panic often marks tradeable bottoms. By removing emotion and focusing on data—like volume spikes and support levels—traders can take the other side of the crowd's emotional reaction.

Conclusion: Navigating the De-Risking Phase

The markets are currently in a de-risking phase, driven by a collision of weak economic data and excessive corporate spending. The "AI shield" that has protected the indices is showing cracks as job losses mount and recession fears resurface.

However, for the prepared trader, this environment is rich with opportunity. By identifying "scene of the crime" retrace levels, waiting for gap fills on stocks like Amazon, and monitoring volume signals in assets like Bitcoin, one can navigate the volatility. The key lies in separating the narrative from the price action. While the headlines scream about a booming AI economy, the charts and the labor data tell a more cautious story.

As we move into next week, the focus will remain on the interplay between bond yields and equity prices. If the 10-year yield breaks down further, it may confirm that the bad news is indeed bad news, and the "buy the dip" mentality of the last few years may need to be replaced with a more defensive, level-dependent strategy.