My Trading Game Plan Revealed - 10/13/2025: S&P Potential Breakdown Amid Semiconductor Strength and Gold Rally

A volatile end to last week saw a massive market drop, only to be met with a significant bounce this morning. The catalyst? A familiar dance of geopolitical rhetoric, with both the White House and Beijing walking back their more aggressive weekend stances. As Gareth Soloway, Chief Market Strategist at Verified Investing, detailed in this morning's My Trading Game Plan, this whiplash price action has created a pivotal technical moment for the markets.

While many traders might be confused by the conflicting signals, a disciplined technical approach provides a clear map. The market has flashed a major warning sign, but as we'll explore, a warning is not yet a verdict. The key lies in understanding the difference between a potential breakdown and a confirmed one, a distinction that separates professional traders from the emotional crowd.

The Anatomy of a "Potential Breakdown"

Friday’s sell-off was technically significant. The S&P 500 sliced through a critical ascending trendline that has supported the market since October 2023. On the surface, this looks like a catastrophic failure. However, experienced traders know that initial breaks are often traps. This is why Gareth labels the current situation as a "potential breakdown," a term loaded with professional discipline and patience.

"Do I go and say, oh, it's a breakout or breakdown the second we close above or below a key level? Or do I say, let's look to see if it's a confirmed breakdown because I've been faked out far too many times on these things in my early career."

This quote gets to the heart of a methodology built on probability, not prediction. An initial break of a key level is simply the first step. To validate the move and signal a true trend change, the market must provide confirmation. In this case, confirmation would require the S&P 500 to close below Friday's low without first reclaiming the broken trendline, which currently sits around 6,685.

If the index closes back above 6,685, the breakdown is negated, and the market is considered "saved," likely returning to the familiar wedge pattern. This disciplined approach removes emotion and guesswork from the equation. Instead of panicking on a big red day, a technician has a clear, two-part test:

1. Did we break a key level? (Yes, on Friday).
2. Did the break confirm? (Not yet).

This process prevents traders from prematurely selling into a bear trap or getting whipsawed by news-driven volatility. The market has given us a question, and now we patiently wait for the answer the charts will provide.

A Market Divided: The Semiconductor Divergence

Perhaps the most compelling piece of the current market puzzle is the stark divergence between the broader market and its undisputed leader: the semiconductor sector. While the S&P 500 has broken its key trendline, the semiconductor sector remains remarkably resilient.

"The semis literally have accounted for 75% of the upside in the S&P over the last two years. That's an incredible stat considering there's only a handful of semiconductor companies, but they have been that dominant in the market overall."

Given this dominance, the health of the semiconductor sector is, in many ways, the health of the market. A look at the VanEck Semiconductor ETF (SMH) chart reveals a stunning contrast to the S&P 500. While the S&P broke its support line, the SMH hasn't even come down to test its own corresponding trendline. The market's general has been wounded, but the elite special forces are still holding the line.

This divergence is further confirmed by looking at NVIDIA. The AI titan has not broken its critical ascending trendline. This tells us that while weakness is creeping into the broader market—evidenced by significant breakdowns in stocks like Royal Caribbean, Home Depot, and Carvana—the core engine of the bull run is still intact.

This leads to a powerful thesis: the S&P 500 breakdown is unlikely to be confirmed until the semiconductors also break down. The semis are the canary in the coal mine, and for now, they are still singing. This is why waiting for confirmation on the S&P is so crucial; it allows time for its leading sector to either catch down to the weakness or pull the rest of the market back up from the brink.

Decoding the Headlines: News vs. Noise

In the world of trading, it's essential to distinguish between fundamental news and market-moving noise. This morning provided a classic example with a headline from JPMorgan, which announced a plan to lend up to $1.5 trillion USD over the next few years for strategic U.S. industries. While the number sounds enormous, Gareth was quick to put it in perspective.

"Anytime the market has a down day, the next day we hear about a company investing 500 billion… In this case, we had a big down day on Friday and today we're getting a headline 1.5 trillion. But again, it's like they're going to lend it. It's not the same, right? It's not a direct investment. It's lending."

This observation highlights a recurring pattern. Following sharp market declines, especially those triggered by political actions, it's common to see a wave of positive-sounding headlines designed to restore confidence. This often works in the short term, but savvy traders learn to look past the headline number and analyze the substance. In this case, a commitment to lend money over several years is far different from a direct, immediate capital injection. It's business as usual, packaged as a market-saving event. This skepticism is a vital tool for traders, helping them avoid being swayed by narratives designed to influence market psychology.

Gold, Silver, and the Dollar Dilemma

While equities wrestle with their trendlines, precious metals are telling a different story. Gold surged to new all-time highs this morning, demonstrating incredible resilience. What's particularly fascinating is its recent behavior: on Friday, gold rallied as the stock market sold off, acting as a classic safe haven. Today, gold is rallying again even as the stock market bounces.

This dual strength is unusual and suggests a powerful underlying bid. One speculative reason mentioned is that stablecoin companies may be diversifying their reserves by buying physical gold, a potential long-term driver of demand as faith in fiat currencies, including the U.S. dollar, continues to be questioned.

Technically, gold is in breakout mode, but just like with breakdowns, confirmation is key. Gold must close above its long-term trendline and then see a subsequent daily close that holds that level to confirm the breakout and invalidate the previous sell signal.

Silver is also pushing higher, and while Gareth sees short-term overbought conditions, his long-term outlook remains incredibly bullish. He believes silver is on a path to the $60 to $62 USD per ounce level during this bull market cycle. The strength in precious metals serves as an important macro indicator, potentially signaling broader concerns about currency debasement and a search for real assets.

Crypto's Weekend Washout and Key Lessons

The crypto market experienced its own brand of chaos with a dramatic "crypto crash" in the after-hours session on Friday. Bitcoin flushed lower, but the key support level identified at $110,000 to $111,000 USD held beautifully. The subsequent bounce has brought prices back into a consolidation range.

Interestingly, Gareth is now watching for the potential formation of a head and shoulders pattern on Bitcoin's chart—a classic topping signal. While it's far too early to confirm, the structure of a left shoulder and a head is beginning to take shape, making the development of a potential right shoulder a key factor to monitor.

The flush provided a fantastic teaching moment on the chart of XRP. After breaking a minor trendline, XRP plummeted but then snapped back. Gareth used this to explain the difference between minor and major resistance. Because XRP never confirmed its breakdown below the trendline, that line now acts only as minor resistance on the way back up. Had the breakdown been confirmed, it would have become major resistance and a high-probability shorting opportunity. This nuance, rooted in the confirmation principle, is what elevates technical analysis to an institutional level.

Grains: The Ultimate Recession Hedge?

Beyond the high-beta worlds of tech and crypto, a quiet opportunity may be brewing in the agricultural space. Commodities like wheat and corn are trading at depressed levels, partly due to the impact of tariffs on U.S. farmers. However, this weakness could present a strategic, long-term opportunity.

Gareth explained his bullish thesis on grains as a recession-proof asset class. "During recessions, grains essentially are recession proof… everyone's got to eat and they usually go towards cheaper alternatives… if you get into a point where people are eating home more during a recession, what are they going to be eating? Probably pasta. Pasta is made out of grains."

This simple, logical thesis is compelling. While consumers might cut back on expensive beef (live cattle is near all-time highs), demand for cheaper food staples like bread and pasta remains robust or even increases during economic downturns. With grains currently trading at technical support on the low end of their historical range, they offer a compelling risk-reward setup for investors looking for assets that are uncorrelated with the broader market and possess defensive characteristics.

Conclusion: The Waiting Game of Confirmation

Today's market action is a masterclass in the importance of patience, discipline, and probability-based thinking. The S&P 500 has issued a serious warning by breaking its long-term uptrend, but the lack of confirmation, combined with the steadfast strength of the semiconductor sector, means it's not yet time to sound the all-clear or the all-out alarm.

The market is at an inflection point. The path forward will likely be determined by whether the market's leaders—the semiconductors—succumb to the weakness seen elsewhere, or if they can once again lift the entire market with them. For now, the disciplined trader's job is to watch the key levels, respect the process of confirmation, and wait for the market to reveal its true intentions.