My Trading Game Plan Revealed - 11/06/2025: S&P at Critical Inflection Point and Semiconductor 102% Topping Signal

In this morning's My Trading Game Plan, Chief Market Strategist Gareth Soloway of VerifiedInvesting.com laid out a compelling case for a market at a critical inflection point. While the S&P 500 hovers near a pivotal technical boundary, cracks are beginning to appear in the market's engine room: the semiconductor sector. Yesterday's late-day reversal in market leader Nvidia, coupled with a powerful long-term topping signal in the semiconductor ETF, suggests a period of heightened risk and opportunity.

Today, we'll delve deeper into the technical evidence behind this cautious outlook, explore the multi-factor analysis that leads to high-probability trades, and examine the crucial lessons from this week's earnings reports that every trader needs to understand.

The Market's Make-or-Break Level

The S&P 500 has staged an impressive rally since its April lows, but it has now arrived at a technical crossroads that could define its trajectory into the end of the year. By analyzing the weekly chart, a powerful parallel trendline emerges, connecting the COVID-19 low, the 2022 bear market bottom, and subsequent major lows. When extended, this line now intersects with the 2021 bull market high, creating a formidable resistance level where the market is currently trading.

As Gareth noted, the precision of these long-term technical patterns is consistently remarkable:

"It's still amazing to me how lows and highs can map out so perfectly… And where are we right now? We're right into that, and notice the markets are starting to struggle just a little bit."

This level represents a true make-or-break point. A decisive weekly close with confirmation above this trendline could signal a "melt-up" scenario into the year's end. However, the current struggle suggests that the path of least resistance may be lower. If this level holds as resistance, a correction of 5% to 10% is a distinct possibility. This isn't a prediction of a crash, but a probabilistic assessment based on decades of historical price action at similar major technical boundaries.

The Semiconductor Canary: A 102% Warning Signal

While the broader market teeters, the semiconductor sector may be sending a much clearer signal. Gareth has been vocal about his belief that this crucial sector is in the process of forming a major top, and his analysis is grounded in a fascinating and historically consistent technical indicator.

The theory revolves around the concept of mean reversion, visualized as a rubber band stretching away from an anchor point. In this case, the anchor is the weekly 200-period moving average on the VanEck Semiconductor ETF (SMH), and the "stretch" is the percentage distance from that moving average to the price high.

• At the 2021 peak, the SMH stretched 102% above its weekly 200 MA before snapping back.
• At another subsequent major high, the stretch again reached 102% before reversing.
• Last week, the SMH hit a new all-time high, and the distance from its weekly 200 MA was, once again, exactly 102%.

"It's like a rubber band, right? It stretches, it stretches, it stretches, and it seems to get into this range about 102% away from that 200 moving average… and then the rubber band snaps back… and the idea here is that's what I think we're starting on in terms of a retrace."

This isn't a coincidence; it's a quantifiable measure of market extension and euphoria. A 119% rally from the April lows alone is staggering, and this 102% indicator suggests the move has reached a historical breaking point. The initial target for a pullback would be the former all-time highs, which would represent a significant correction from current levels.

Further evidence supporting this thesis emerged yesterday. Nvidia, the sector's undisputed leader, collapsed by approximately $6 USD in the final 20-30 minutes of trading—a highly unusual move for a $5 trillion USD company. Additionally, post-bell earnings from Qualcomm and Arm Holdings were lackluster, with Qualcomm set to open lower and Arm posting only minor gains. This collection of data points paints a picture of a sector that is, at the very least, exhausted.

The Power of Multi-Factor Analysis: A Dollar Case Study

Successful trading is rarely about a single indicator; it's about building a case by assembling multiple, independent pieces of evidence that all point to the same conclusion. Gareth's recent correct call on the US Dollar provides a perfect case study in this probabilistic approach.

Yesterday, he predicted a pullback in the dollar, which is now playing out. The forecast wasn't a guess; it was based on the convergence of three distinct technical factors:

1. Time Count: The dollar had rallied for six consecutive candles. A seven-candle sequence is a common technical pattern that often signals an impending reversal or pause.
2. Price Resistance: The rally ran directly into a major resistance zone established by price pivots dating back to 2023.
3. Candlestick Pattern: The sixth candle formed a doji, a pattern that signifies indecision between buyers and sellers and often precedes a reversal.

"You have one piece of the puzzle, you get to like 65% success rate… You have two factors… the odds start to increase. You have three factors. Now you're up at like 75, 80% success rate on your analysis."

This methodology transforms trading from a guessing game into a disciplined, logic-based profession. By waiting for setups where multiple factors align, traders can significantly increase their probability of success, leaving emotion and hype-driven narratives behind.

Earnings Lessons: Context, Expectations, and Discipline

Earnings season provides a firehose of information and volatility, but the key lessons often lie beyond the headline beats and misses.

DoorDash and the Economic Reality: DoorDash (DASH) saw its stock plummet 11-12% after its report. While this may have surprised some, it aligns perfectly with the warnings issued by companies like Chipotle and Kava. They previously noted that younger consumers are struggling with affordability, even for fast-casual dining. If that demographic can't afford a burrito bowl, are they likely to pay the premium fees for food delivery? The market's answer was a resounding "no." This is a powerful reminder that chart analysis must be paired with an understanding of the underlying economic context.

The Psychology of Expectations: Why does a stock sometimes fall on great earnings? Look no further than Palantir, which made a new all-time high going into its report. Despite beating on revenue and earnings and raising guidance, the stock fell. Conversely, Snapchat (SNAP), a stock that has been severely beaten down from its all-time highs, managed to rally. The difference is expectations. For Palantir, expectations were so high that even a stellar report wasn't enough. For Snapchat, expectations were so low that any positive news was seen as a victory. This highlights a critical concept: a stock's position on its chart often tells you more about its likely reaction to earnings than the news itself.

The Discipline of Levels: AppLovin (APP) gapped up significantly in the pre-market. Before the move ever happened, Gareth had already mapped out his potential trade levels: a short at the double top resistance and a potential long at a lower support zone. The stock traded in the middle, never hitting either level. The correct trade? No trade at all. This is the essence of discipline—identifying high-probability zones in advance and having the patience to do nothing if the price doesn't come to you.

The Trader's Journey and Unbiased Execution

Beneath all the charts and analysis lies the most difficult component of trading: managing oneself. It's a skill forged over years of experience, losses, and relentless self-assessment.

"Trading is hard. There's a reason why so few people can do it as a career, because it actually takes a ton of work. I would argue it's one of the hardest careers to be profitable in because you actually have to manage your emotions incredibly well."

This mastery leads to an unbiased approach to the markets. A chart is simply a vehicle for a potential trade, whether it's Natural Gas, Bitcoin, or Gold. For Natural Gas, which has had a vertical run, Gareth identifies a clear plan: he would short it at the next major resistance but would be an enthusiastic buyer on a pullback to the breakout point. The asset itself is irrelevant; the high-probability setup is everything.

This same logic applies to Bitcoin. The crypto asset continues to trade in correlation with the stock market, but with significant weakness. It's hovering above a critical uptrend line around $93,000 USD that marks the bull market's foundation. A hold at that level would be bullish, but a break would be "very bad for Bitcoin." Historically, Bitcoin has been a leading indicator, topping out 4-6 weeks before the stock market in both 2017 and 2021. Its current weakness should not be ignored by equity investors.

Conclusion: Navigating the Inflection Point

The market is sending a complex series of signals. The S&P 500 is testing a multi-year technical barrier that demands respect. Simultaneously, the semiconductor sector, the market's former leader, is flashing a historically reliable topping signal based on extreme extension.

Navigating this environment requires moving beyond simple bullish or bearish labels and embracing a probabilistic mindset. By combining multiple technical factors, understanding the context behind price moves, and exercising unwavering discipline, traders can identify high-probability opportunities while managing risk. As the evidence mounts for a potential market shift, a logical, chart-based approach is more critical than ever.