My Trading Game Plan Revealed - 10/23/2025: Markets Perched on a Cliff Ahead of CPI

As traders brace for tomorrow's critical CPI inflation data, the market is sending a clear message: we are in a precarious position. While major indices are holding flat, the underlying technicals reveal a vulnerability that cannot be ignored. In this morning's My Trading Game Plan, Gareth Soloway, Chief Market Strategist at Verified Investing, dissected the charts that show the market is "hanging off the cliff, holding on with both hands, trying not to slip."

Today, we'll expand on that analysis, exploring the critical warning signs in the major indices, the "priced for perfection" reality check hitting earnings season, and the profound difference between today's economic landscape and historical precedents.

The Market's Precarious Perch

The S&P 500 may be opening flat, but the daily chart tells a story of caution. The index remains below a key ascending trendline, a position that serves as a persistent warning sign for bulls. More importantly, recent price action is contained within what technical analysts call a "wide range red sell candle." This large, bearish candle from a few days ago has established a powerful zone of influence.

"As long as price stays inside of the red, then it is overall bearish. You have a bearish bias," Gareth explained. This means that despite any minor bounces or sideways chop, the prevailing technical pressure is to the downside until price can decisively break out above the top of that red candle.

This isn't a confirmed breakdown yet, but rather a high-alert situation. The true test will come if the market starts to slip and takes out the low of that wide range candle. A confirmed close below the 6,550 level on the S&P 500 would likely trigger the next major leg down. Where would it be headed? The most logical technical target would be the highs from January 2025, which sit around the 6,100 level. That former all-time high, once a ceiling of resistance, would now become the next major floor of support. The QQQ, tracking the Nasdaq 100, shows a nearly identical pattern, reinforcing that this is a market-wide condition, not an isolated event.

The Semiconductor Canary in the Coal Mine

For a clearer picture of the market's underlying health, Gareth directs our attention to the semiconductor sector, specifically the SMH ETF. This chart, he notes, is one of the most important indicators right now. The SMH has rallied to tag a massive, multi-year trendline that connects the pivotal COVID-19 lows, the 2022 bear market, and subsequent highs.

Historically, hitting this line has preceded significant corrections. What makes the current situation even more alarming is the sheer scale of the preceding rally. The last time the SMH hit this trendline, it triggered a correction of nearly 40%. The run-up to our current position has been even more extended, suggesting the market is even more vulnerable to a similar, if not larger, pullback. This extreme extension in a leadership sector like semiconductors is a classic late-cycle signal that warrants extreme caution.

Earnings Season's Reality Check: Priced for Perfection

This vulnerability is being exposed daily during the current earnings season. The theme is clear: good is no longer good enough. When stocks are trading at or near all-time highs, they are priced for absolute perfection, a standard that is proving nearly impossible to meet.

"When we get into earnings season and stocks are at all time highs, these companies have to report amazing, absolutely amazing numbers, almost unattainable numbers to continue their upside momentum," Gareth stated.

IBM: A Textbook Example IBM is the poster child for this phenomenon. The company reported solid earnings, yet the stock is down a staggering 8%. Why? Because the results, while good, had minor weaknesses in the cloud division. For a stock that was trading at a double top near all-time highs, that small "crack in the mirror of perfection" was all it took for sellers to take control.

This wasn't a surprise for those watching the charts. Weeks ago, Gareth pointed out a powerful two-factor reversal signal on IBM's daily chart: a double top combined with a bearish "topping tail" candle. That technical warning preceded this earnings-driven collapse. Now, the stock is heading towards its next major support level, a trendline connecting the 2024 and 2025 lows, which points to a target around $250.00 USD.

NVIDIA: Saved by the Bell, But For How Long? NVIDIA, the market's undisputed leader, is living on the edge. The stock has been repeatedly saved from a technical breakdown, often in the final hour or even minutes of the trading day. It continues to teeter just above its critical confirmation level of $179.75 USD. A close below this price would confirm a breakdown from its ascending wedge pattern and likely "open the floodgates" for sellers.

While it hasn't broken down yet, the price action is forming a classic bearish consolidation pattern known as a bear flag. This pattern, characterized by a slight upward drift after a sharp drop, has a high probability of resolving to the downside. The repeated, last-minute saves are dramatic, but the bearish pattern forming beneath the surface suggests the pressure is building.

When Technicals Foretell the News

While earnings often feel like a coin flip, technical analysis can provide an invaluable edge by identifying zones where the probability of a reversal is high. The recent action in Rigetti Computing (RGTI) is a perfect case study. The stock had been crushed, falling nearly 40% in just six trading days.

However, it fell directly into a confluence of powerful support levels: the 50% Fibonacci retracement of its prior major swing high and a key price pivot from a previous high. As Gareth noted, "when you have a Fibonacci 50% retrace, a 40% drop in the stock, basically, and a key pivot point hit, the odds of a bounce are starting to increase."

And bounce it did. Today, the stock is up nearly 15% on rumors that the Trump administration may be looking to take stakes in supercomputing companies. The key takeaway is that the chart signaled a high probability of a bounce before the news catalyst was known. This is a powerful illustration of a core trading principle: "Price is truth. Always remember that at least for the case of traders and investors, price is truth."

Gold, Debt, and Disturbing Historical Echoes

Looking at the commodities space, gold is in a short-term corrective pattern. After a large downward move, it's seeing a minor bounce, which is typical before the next leg lower. Gareth has identified several downside targets, with the lowest level representing a zone where he would be a "heavy, longer-term buyer."

His long-term conviction is rooted in a stark contrast between our current economic reality and the last major gold top in 1980. Back then, Fed Chair Paul Volcker could aggressively raise interest rates to 18% to combat inflation. This was possible because U.S. debt-to-GDP was a manageable 32%.

Today, our debt-to-GDP stands at a staggering 130%, and the national debt just crossed $38 trillion USD, on a trajectory to hit $40 trillion USD by early next year. In a healthy economy, governments use periods of growth to pay down debt. Instead, the spending has continued unabated. This creates a dangerous scenario where, in the next recession, the government may lack the fiscal capacity to stimulate the economy, potentially leading to a prolonged period of stagnation. This long-term picture is fundamentally different from the 1980s and forms the bedrock of the long-term bullish case for gold as a store of value.

The Trader's Ultimate Virtue: Discipline

Across every chart and setup discussed, one theme resonates above all others: the necessity of discipline. Whether it's waiting for natural gas to pull back to a specific buy zone or passing on a trade in oil because the risk-reward isn't favorable, patience is paramount.

"The discipline of a trader is the one thing I can't teach. We all have to find that within ourselves," Gareth emphasized. "If I miss a trade, there's always another trade coming around the corner."

This mindset is what separates professionals from amateurs. It's the understanding that trading is not about being right on every move; it's about patiently waiting for high-probability setups where the potential reward justifies the risk. It's about having a plan and sticking to it, even if it means watching a market move without you.

Conclusion: Navigating the Warning Signs

As we head into tomorrow's CPI report, the market is balanced on a knife's edge. The major indices are flashing clear warning signs, the semiconductor sector is signaling major vulnerability, and earnings season is punishing anything short of unattainable perfection.

The path forward for traders is not to predict, but to prepare. By identifying key technical levels, understanding the macro context, and exercising unwavering discipline, we can navigate this uncertain environment. The charts have laid out the battle lines. Now, it's a matter of waiting for the confirmation and executing with a clear, probability-based plan, remembering that in the world of trading, there is always another opportunity just around the corner.