My Trading Game Plan Revealed - 12/09/2025: S&P 500 Sell Signals, Rising Yields and Insider Trade Alert

As the market holds its breath ahead of tomorrow’s pivotal Federal Reserve decision, a series of compelling sell signals are flashing across the major indices. In this morning's My Trading Game Plan, Gareth Soloway, Chief Market Strategist at Verified Investing, dissected a market landscape defined by poor risk-to-reward ratios, historical chart parallels, and glaring signs of potential insider activity. While holiday seasonality may suggest a "Santa Claus rally," the charts are telling a much more cautious and complex story.

This article delves deeper into the key themes from today's show, expanding on the technical setups, the psychological underpinnings of key levels, and the strategic patience required to navigate a market at a critical inflection point.

The S&P 500's Unfavorable Risk Profile

After methodically filling the final upside gap on the chart, the S&P 500 now finds itself in a precarious position. While the allure of a year-end rally persists, a logical, probability-based analysis reveals a starkly unattractive setup for new long positions. From yesterday's closing price, the maximum technical upside target sits a mere 1.9% higher. For a trader, this presents a classic dilemma of risk versus reward.

As Gareth bluntly put it this morning: “1.9% really? That's the extent of it? To me as a technician, as a logic based trader, it doesn't really make sense for me to go along here on the charts for a 1.9% move on the S&P 500.”

This isn't an emotional bias; it's a mathematical calculation. Professional trading is about finding asymmetric opportunities where the potential reward significantly outweighs the potential risk. When the upside is capped at less than 2%, while the downside could be substantially larger, the probability edge simply isn't there.

Adding another layer of caution is a fascinating historical parallel Gareth identified in real-time. The current price action is eerily reminiscent of the pattern that formed at the bull market high. In that instance, the market rallied to a key trendline, pulled back, and then "double tapped" the resistance level before a much larger decline began. The current chart shows a similar structure: a move down, a move up to resistance, another move down, and a potential final push up. If history rhymes, a short-term Santa Claus rally could simply be the final "double tap" before a more significant corrective move in the new year.

The Psychology of 2% and the Global Bond Market

While all eyes are on the Fed, the real drama in recent weeks has been in the bond market, specifically the meteoric rise of the Japanese 10-year yield. This surge has been a primary driver of the U.S. 10-year yield's recent rally. Today, the Japanese 10-year is pausing just shy of a critical level: 2%.

Why is this 2% level so significant? The answer lies more in human psychology than in pure economics. Gareth drew a brilliant parallel to retail pricing strategies.

"When you go buy something at the store, what's the price, $19.99, you know, $9.99, $1.99. Why not $2? Why not $10? Why not $20? Because it's psychological… you can relay that same information from retail and how retail prices things to how human nature behaves when there's a 2% handle on the Japanese 10-year."

This concept is powerful. The human brain processes 1.99% and 2.00% as fundamentally different, even though the numerical difference is negligible. Crossing that "2" handle represents a significant psychological barrier, often leading to a pause or reversal as the market digests the new reality. This is why the current consolidation in the Japanese 10-year yield is so important. Is it a pause before a major breakout, or is it a rejection from a key psychological ceiling? The answer will have significant ripple effects on U.S. yields and, consequently, on the equity markets, especially with the Fed's commentary on the horizon.

Unmasking Potential Market Manipulation

Transparency and a level playing field are ideals that every retail trader strives for. However, recent market events suggest that not all participants are playing by the same rules. Gareth highlighted a deeply concerning pattern yesterday that points to potential insider information leaks.

In the final 10 minutes of yesterday's trading session, the SPY (the S&P 500 ETF) experienced a sudden, sharp spike higher. Shortly after the market closed, at 4:20 PM ET, news broke that President Trump had approved the sale of NVIDIA's H200 chips to China. This news caused an immediate pop in NVIDIA's stock in after-hours trading.

The sequence is highly suspicious. A significant, unexplained market buy program right before market-moving news is released after the bell is a classic footprint of informed trading. It suggests that certain individuals or funds received the information ahead of the public.

"These decisions inside of the government that are major shifts, they are getting passed off to people ahead of time who are then able to literally make millions of dollars on these type of announcements," Gareth explained. This isn't a conspiracy theory; it's an observation based on chart data and timing. While technical analysis provides a powerful edge to compete with institutional money, it cannot fully counteract the illegal advantage of insider information. Recognizing these patterns, however, can help traders avoid being on the wrong side of such manipulated moves.

Toll Brothers and the Cracks in Housing

The earnings report from homebuilder Toll Brothers provided another piece of evidence for a theme Gareth has been tracking for months: the housing market is in a recession. The stock cratered in after-hours trading, falling toward the $128 USD level.

This sharp decline brings the stock into a key technical zone for a potential day trade. Gareth identified a confluence of support levels to watch: a gap fill at $126.20 USD and a pivot low at $124 USD. This specific, pre-defined range offers a high-probability zone for a quick scalp or bounce trade.

However, he was adamant that this is not a swing trade opportunity. The stock is threatening to break a major multi-month trendline. A confirmed break of this trendline would signal a much larger move to the downside is likely. This highlights a crucial distinction between day trading and swing trading: a level that is attractive for a short-term bounce can be disastrous for a longer-term hold if the bigger picture has turned bearish.

The weakness in Toll Brothers is a symptom of a larger problem. Even if the Fed cuts short-term rates, mortgage rates are tied to the long end of the yield curve. With the U.S. government continuing to run massive deficits, buyers of U.S. debt will inevitably demand higher interest rates to compensate for the increasing risk, keeping long-term rates elevated and pressuring the housing market for the foreseeable future.

High-Flyers Testing Critical Ceilings

While the broad market churns, specific stocks are hitting make-or-break resistance levels. Carvana, a perennial favorite short, provided a textbook example yesterday. After popping on the news of its inclusion in the S&P 500, the stock ran directly into a powerful, multi-pivot trendline connecting the major low from April and subsequent lows. The rejection from this "scene of the crime" level was technically perfect and signals a major sell opportunity. With the company trading at a forward P/E ratio between 75 and 100, the fundamental valuation disconnect adds fuel to the bearish technical case.

Similarly, Broadcom is another tech giant showing signs of extreme exhaustion. The stock is trading at a forward multiple that is double NVIDIA's, a valuation that is difficult to justify. As it approaches a staggering $2 trillion USD market cap, the law of large numbers begins to apply, making continued exponential growth increasingly difficult. These types of over-extended, high-valuation names often provide the highest-probability shorting opportunities when the broader market begins to show weakness.

Conclusion: Navigating with Logic and Patience

The current market environment is a minefield of conflicting signals. A seasonal tendency for bullishness is clashing with a host of technical sell signals, an unattractive risk/reward profile, and a looming Federal Reserve decision that could change the entire landscape in an instant.

In times like these, the principles of logic, probability, and patience are a trader's greatest assets. The analysis from today's show provides a clear roadmap:

• Acknowledge the Poor Risk/Reward: Avoid chasing the S&P 500 long for a meager 1.9% potential upside when downside risks are mounting.
• Identify Key Levels in Advance: Have precise entry zones ready, like the $124-$126.20 USD area on Toll Brothers for a day trade, or the major trendline on Carvana for a short.
• Understand Both Sides: As with the Gold analysis, always know your bull case and your bear case. Know the price level (like $4,100 USD on Gold) that invalidates your primary thesis. As Gareth reminds us, "The best traders in the world always look at the negatives included in the positives."
• Stay Disciplined: The epic reversal in Natural Gas, which hit Gareth's short level from a month ago, is a testament to the power of setting a level and patiently waiting for the market to come to you.

As we await the Fed's commentary tomorrow, the message from the charts is one of caution. The easy money has been made on this rally. Now is the time for discipline, selectivity, and a trading plan rooted firmly in logic and data, not hype and hope.