My Trading Game Plan Revealed - 12/03/2025: S&P 2% Ceiling, Nasdaq Breakdown, and 20 Trillion Yen Carry Unwind

The market is sending mixed signals. After a holiday-week rally on light volume, price action has turned choppy and uncertain. While the S&P 500 closed slightly positive yesterday, an undercurrent of technical weakness suggests that the path of least resistance may soon shift downwards. In this morning's My Trading Game Plan, Gareth Soloway, Chief Market Strategist at Verified Investing, laid out a compelling, data-driven case for caution, highlighting critical resistance levels and overlooked macro risks that could trigger the next major market drop.

The S&P 500's 2% Problem

While many market commentators are relentlessly bullish, a disciplined, technical approach reveals a far more precarious picture. The S&P 500 has rallied directly into a significant resistance zone defined by a gap fill at 6,850. For two consecutive days, this level has capped the market's upside, signaling a potential turning point.

The real story, however, is told on the weekly chart. A massive parallel channel, which has accurately marked every major high and low for the past five years, is now acting as a formidable ceiling. This isn't just a minor trendline; it's a historically significant barrier that has repeatedly reversed powerful market trends. As Gareth explained, this creates a critical risk/reward imbalance for anyone looking to go long at current levels.

“How much upside is there left? In other words, if I'm going to go long the stock market right now, right? How much upside do I have till I run into a brick wall where there's a real test? And the answer is about 2%.”

This simple calculation is at the heart of professional trading. Why risk significant capital for a potential 2% gain before hitting a level that has historically resulted in major declines? This is where logic and data must override the prevailing narrative of hype and emotion. Narratives are fleeting—the AI boom, valuation concerns, the return to bullishness—but chart levels provide a concrete, testable framework. Until the market proves it can break through this multi-year resistance, probability dictates that caution is the most logical stance.

The Nasdaq Returns to the "Scene of the Crime"

While the S&P 500 is testing its major overhead resistance, the tech-heavy Nasdaq 100 (QQQ) is flashing an even more immediate warning sign. The index recently broke below a critical ascending trendline that had served as support through September, October, and November. In a classic technical pattern, the price has now rallied back to test that same broken trendline from below.

“That's what we call in the business, the scene of the crime. In other words, this line was support, support, support, broke, now it's technically resistance.”

This principle—that broken support becomes new resistance—is one of the most reliable concepts in technical analysis. It represents a level where previous buyers who are now trapped in losing positions are eager to sell at their breakeven point, creating a natural supply zone. The fact that the QQQ’s rally yesterday stalled precisely at this level is a significant technical event. It adds another layer of evidence that the recent market strength is facing a major test, and the odds favor at least a partial rejection from this zone.

The $20 Trillion Unwind No One Is Talking About

Beyond the U.S. indices, a massive global macro force is quietly building momentum, threatening to drain liquidity from the financial system. For weeks, Gareth has been highlighting the rising Japanese 10-year yield and its connection to the yen carry trade. This isn't just an obscure bond market metric; it represents the potential unwinding of a multi-decade trade that has injected trillions into global markets.

For years, large institutions borrowed money in Japan at zero or even negative interest rates and invested it in higher-yielding U.S. assets. As Japan's yields rise, this trade becomes unprofitable and must be unwound. This means selling U.S. assets to buy back yen and repay the loans.

“There's talk that this is literally a 20 trillion dollar unwind of liquidity. So while the Fed is set to cut rates and everyone's like, oh, this is going to increase liquidity, you have the fighting force, the opposite going on with the yen carry unwind.”

This is a critical concept for investors to grasp. While the market is celebrating the prospect of Federal Reserve rate cuts, the unwinding of the yen carry trade acts as a form of quantitative tightening, effectively removing money from the system. This creates a powerful headwind that could easily counteract the dovish actions of the Fed, catching many unsuspecting investors off guard.

A Disciplined Approach to Shorting Market Leaders

When major technical levels are reached, it’s time for disciplined action. Gareth detailed two specific short trades he initiated based on the principles of logic and patience, targeting two of the market's most prominent names: Apple and Walmart.

Apple's Multi-Year Resistance

Apple has rallied directly into the upper boundary of a massive parallel channel that connects the March 2020 COVID lows, the 2022 bear market low, and multiple other key pivot points. Hitting this line triggered Gareth’s entry into a short position. However, the execution of the trade is just as important as the setup. Instead of going "all in," he initiated a quarter-sized position.

This methodical approach to scaling into a trade is a hallmark of experienced traders. It acknowledges that even the strongest resistance levels can be temporarily pierced by momentum and greed. By starting small and planning to add to the position at higher levels (e.g., every $5.00 USD to $7.00 USD higher on Apple), a trader prepares for the unknown and avoids the catastrophic risk of being fully committed if the trade initially moves against them.

“Once you turn to praying for the markets to do something, you're at the mercy of the markets. And the markets are almost like an entity that smell… it's like a shark with blood in the water. They will go after you.”

The initial target for a pullback on Apple is the former bull market high from 2024, around the $260 USD level, which should now act as major support.

Walmart's Technical and Fundamental Red Flags

Walmart presents another compelling short setup. The stock has tagged the top of a clean parallel channel, a clear technical resistance point. But what makes this trade particularly interesting is the fundamental backdrop. It’s hard to ignore a situation where Walmart, a legacy retailer, has a P/E ratio of 59, while NVIDIA, the leader of the AI revolution, has a P/E ratio of 25. This type of valuation disconnect often signals extreme bullishness and over-allocation in a stock, making it vulnerable to an unwind. Just like with Apple, this is a setup for a starter position, with a logical target at the low end of the parallel channel.

The Psychology of a Trader: Logic, Patience, and Real-Time Execution

The most valuable lessons often transcend individual charts. The core of successful trading lies in a psychological framework built on discipline and logic. This means patiently waiting for a predefined level to be hit before acting, rather than chasing price. It means understanding that trading is a game of probabilities, not certainties.

This philosophy was on full display during the live show. As Gareth was analyzing the charts, the market suddenly experienced a dramatic 50-point drop on the S&P futures. Rather than panicking, he calmly executed his game plan, taking a profit of approximately $24,500 USD on a VXX position he had entered earlier. This real-time event perfectly illustrated the importance of having a plan and acting on it decisively when the market provides the opportunity.

It also reinforces the contrarian mindset. The VIX, a measure of market volatility, has been trading at ridiculously low levels, signaling extreme complacency among investors. Gareth’s view is that this complacency is a trap.

“The retail investor is getting lulled right back to sleep as institutions just want to unload and unload and unload.”

By recognizing this complacency and positioning for a spike in volatility, a prepared trader can capitalize on sharp, unexpected moves, just as we witnessed this morning.

Conclusion: Navigating a Market Lulled into Complacency

Today’s market landscape is fraught with hidden dangers. While indices hover near key resistance, a dangerous level of complacency has set in, leaving many investors vulnerable. The S&P 500 has, at best, 2% of potential upside before hitting a five-year wall of resistance. The Nasdaq has already returned to the "scene of the crime," testing a critical broken support level. And beneath the surface, the multi-trillion-dollar unwind of the yen carry trade threatens to pull liquidity from the global system.

In this environment, the disciplined, data-driven approach is paramount. By identifying high-probability setups like those in Apple and Walmart, scaling into positions methodically, and understanding the psychological battle against greed and complacency, traders can navigate these treacherous waters. As the sudden market drop this morning demonstrated, volatility can return in an instant. Those who are prepared, logical, and patient will be the ones who not only survive but thrive.