My Trading Game Plan Revealed - 10/20/2025: Market Yellow Flag S&P 500 Caution, Dollar Crossroads, Earnings, Gold, Bitcoin, Setups

As we enter a pivotal week packed with major earnings reports and key inflation data, the market is sending clear signals of caution. While the major indices have been resilient, they are now hovering in a precarious technical position that demands discipline and a clear-headed approach from traders. In this morning's My Trading Game Plan, Gareth Soloway, Chief Market Strategist at Verified Investing, broke down why the charts are waving a yellow flag—not a red one—and identified specific setups where opportunities may be forming.

This article will expand on those key themes, providing deeper context on the market’s warning signs, the critical long-term crossroads for the US Dollar, and the powerful psychological framework required to navigate this environment without emotion.

The Market's Yellow Flag Warning

For the past week, both the S&P 500 and the Nasdaq 100 have been trading in what can best be described as a technical "warning zone." Both indices have dipped below a critical ascending trendline that has provided support for months. However, as Gareth emphasized, this is not yet a confirmed breakdown, and the distinction is crucial for traders.

“The charts are waving a yellow flag, not a red flag, which is a breakdown flag, but a yellow cautionary flag to be aware, but not jump the gun just yet.”

A confirmed breakdown requires more than just a brief dip below a trendline; it requires a daily close below a recent significant low. For the S&P 500, that key level is the low from a week ago Friday, at approximately 6,550. Until we see a definitive close below that price, the market remains in a state of caution, not panic. This "yellow flag" state means traders should be vigilant and manage risk, but not aggressively short the market and call a major top.

This is a classic scenario where market psychology is tested. It’s tempting to see a break of a trendline and immediately assume a major reversal is underway. However, markets often test these levels, shake out weak hands, and then recapture the trendline to continue higher. Conversely, a failure to recapture the line followed by a break of the confirmation low (6,550) would signal that the bears have taken control. The current price action is the battleground where this outcome will be decided.

The Dollar's Long-Term Crossroads

Zooming out from the daily fluctuations of the stock market, the US Dollar Index (DXY) is approaching a historically significant inflection point. The DXY, which measures the dollar against a basket of major world currencies, is currently caught between resistance around 100.9 and a massive, long-term uptrend line that dates back to the financial crisis.

Since 2008, despite periods of weakness, the dollar has maintained a structural uptrend. This trendline represents the foundation of the dollar's strength for over a decade. A definitive break below this support, specifically a move below 94 on the DXY, would signal a major regime change for global currency markets.

Such a breakdown would be profoundly bullish for assets priced in dollars, most notably gold and potentially Bitcoin. It would serve as a powerful confirmation of the "de-dollarization" narrative that has been gaining traction. While this process is slow-moving, a technical break of this magnitude would accelerate the conversation and likely trigger significant capital flows. As Gareth noted, while other countries also face debt and money-printing issues, geopolitical factors and new trade deals could cause the dollar to weaken relative to other currencies. For now, this long-term chart remains one of the most important macroeconomic charts to watch.

What Falling Yields Are Really Telling Us

Last week, the 10-year Treasury yield confirmed a technical breakdown, closing below the low of its prior breakdown candle. This is a significant development that suggests the path of least resistance for yields is now lower, with an initial target around the 3.6% level.

However, the "why" behind this move is more important than the move itself. Many might assume falling yields are simply a precursor to the Federal Reserve cutting interest rates. While that may be part of the equation, the charts and underlying economic data suggest a more concerning driver: a weakening economy.

“The only way rates can come down is if the economy is weakening significantly, and again, we're seeing more and more signs of that through various kind of economic pseudo data defaults, credit card delinquencies, things like that.”

With inflation still hovering between 3% and 4%, the Fed cannot aggressively cut rates without risking a major resurgence in prices. Therefore, a significant drop in yields is more likely to be the bond market pricing in economic contraction. We are already seeing stress in data points not officially reported by the government during the shutdown, such as rising credit card delinquencies and warnings from regional banks about commercial loans "going very bad, very quickly." The bond market is often smarter than the stock market, and its message right now is one of economic caution.

Earnings Setups: The Art of Trading Without Emotion

With earnings season kicking into high gear, volatility in individual stocks is set to spike. This week brings reports from Netflix, Tesla, and others. While these events create large price swings, they also introduce a level of uncertainty that can be treacherous for traders. Gareth’s approach is one of patience, preferring to react to the post-earnings price action rather than gamble on the outcome.

“I don't like to guess on earnings… you can be right like 70% of the time guessing on earnings based on the chart, but when you're wrong, you can be wrong really badly.”

This philosophy is rooted in probability. An earnings report is a "wild card" that can skew technical probabilities. A company can beat on revenue and earnings, yet the stock can fall on weak guidance. Conversely, a CEO’s comments on a conference call can turn a poor report into a rallying cry.

Tesla (TSLA): Reporting on Wednesday, Tesla’s chart is dominated by a powerful bearish reversal candle from a few weeks ago. Until price can definitively close above that candle, it remains the primary force, giving the chart a slightly negative bias. This is a perfect example of trading what you see, not what you believe. Whether you love or hate the company is irrelevant. The key is to operate from what Gareth calls the "I don't care zone."

“The ‘I don't care zone’, meaning that these charts tell me what to do, I don't have preconceived notions, I don't have emotion, I couldn't care less. They are vehicles for me to make money.”

This emotional detachment is a hallmark of professional trading. When emotion enters the decision-making process, discipline is lost, and costly mistakes are made.

Biogen (BIIB): In contrast to the uncertainty around earnings plays, Biogen presents a clean, high-probability technical setup. The stock recently broke out of a multi-month downtrend, confirmed the breakout with a secondary close above the trendline, and has now pulled back to retest that same trendline from above. This "retrace to the scene of the crime" is a classic bullish pattern. The former resistance line should now act as strong support, providing a logical entry point for a potential move higher in the coming days and weeks. This setup, along with a similar one in Pfizer (PFE), also plays into a money rotation thesis: if the high-flying tech sector begins to falter, money managers will likely rotate capital into more defensive sectors like pharmaceuticals.

Gold, Silver, and Bitcoin: Pullbacks as Opportunity

Gold: The precious metal has been on a historic run, and its price action is showing a fascinating parallel to its parabolic move in the late 1970s. Both periods featured a consolidation followed by a nine-week surge. In 1980, that surge marked a multi-decade top. Today, however, the fundamental backdrop is entirely different. In 1980, Fed Chair Paul Volcker was hiking interest rates to extreme levels to combat inflation. Today, with government debt at unprecedented levels, a similar policy action is impossible. Therefore, while the historical parallel suggests a healthy pullback is imminent, Gareth believes it will be a major buying opportunity for a longer-term move toward $5,000 USD and $6,000 USD per ounce.

Silver: Silver’s chart reveals what Gareth called an "incredible parallel" that signals a near-term pullback is likely. A channel drawn from the 2008 low through the 2020 COVID low, when extended upward, perfectly tags the 2011 bull market high near $50 USD and the high from last week. Hitting the top of such a significant long-term channel is a strong technical signal for consolidation or a correction. Like gold, this is viewed as a chance to buy a dip before the next major leg higher toward $60 USD.

Bitcoin: After confirming a breakdown below its key uptrend line, Bitcoin has rallied back to retest the underside of that line—another "scene of the crime" retrace. So far, this former support has acted as resistance, rejecting the price. If this rejection holds, the next logical downside target is a parallel trendline in the $94,000 to $96,000 USD range. For the bulls to regain control, Bitcoin would need to reclaim and confirm a close back above $111,500 USD. It’s also possible we’ve seen some capital rotate from Bitcoin into gold during gold's recent surge; a pullback in gold could potentially fuel a rotation back into Bitcoin.

Conclusion: Navigating the Crossroads with Discipline

This week presents a market at a crossroads. The major indices are flashing yellow warning lights, bond yields are signaling economic weakness, and earnings season is injecting a dose of "wild card" volatility. In this environment, a disciplined, probability-based approach is paramount.

The key takeaways are clear: respect the cautionary signals in the S&P 500 and Nasdaq but wait for confirmation before turning fully bearish. Watch for high-probability technical setups, like the breakout-and-retest pattern in Biogen, that offer clear risk-reward scenarios. And above all, operate from the "I don't care zone," letting the charts dictate your actions, not your emotions or biases. By sticking to the data and the discipline of technical analysis, traders can confidently navigate the challenges and opportunities of the week ahead.