Trading Game Plan Revealed - 10/03/2025: Institutional Intraday Patter

As the market continues its daily dance of opening higher only to fade, traders are learning to look beyond the headlines and into the charts for the real story. In this morning's Trading Game Plan episode, Gareth Soloway, Chief Market Strategist at Verified Investing, peeled back the curtain on the market's intraday patterns, revealing the clear footprint of institutional activity and the critical technical levels that will dictate the next major moves.

From a multi-year trend line test on NVIDIA to a classic reversal pattern in Tesla, the market is sending signals. Today’s article dives deeper into these setups, explores the psychology of failed patterns, and reveals Gareth’s top long and short candidates for the month of October.

Decoding the Institutional Footprint

A recurring theme has emerged in the market's daily behavior: a gap up at the open, followed by a steady sell-off until midday, and then a low-volume drift back towards the flatline into the close. While this may seem random to the casual observer, it’s a pattern that reveals a great deal about who is in control. As Gareth pointed out, the timing of these moves is no coincidence.

“That is exactly at 6am eastern time and this is how you know that there's some institutional involvement right. So mom and pops don't say hey listen, it's 6am, let's start selling the S&P futures. That is institutional algorithmic trading that's been pre-programmed into the markets right there.”

This observation is critical. The pre-market strength is often driven by retail enthusiasm, fueled by overnight news or futures action. Institutions then use this initial burst of buying as "exit liquidity," systematically selling into the strength to offload their large positions without causing a panic. Once their selling pressure subsides around noon, the lack of institutional volume allows the market to float higher on lighter retail activity.

This is a masterclass in market mechanics and a powerful reminder to focus on the charts over the noise. Media outlets are designed to elicit an emotional response, to keep you glued to the screen. A true technician, however, learns to filter out this noise and trust the data presented on the charts. As Gareth bluntly advises, “If you're a true technician, block it the hell out because it's not going to help you when it comes to trading. In fact, it's going to get you on the wrong side overall.”

The S&P 500 and Nasdaq at Key Junctures

With the market's internal dynamics understood, the focus shifts to the major indices and their defining technical boundaries. The S&P 500 is currently caught in a tightening range, with two clear levels defining the battlefield. The upside resistance is a key trend line sitting around 6,750, while downside support is located near 6,630. These two lines are converging, meaning the market will soon be forced to make a decisive break in one direction. The job of a technical trader is not to guess the direction but to wait for the charts to confirm the break and then act accordingly.

Meanwhile, the tech-heavy Nasdaq 100 is facing an even more significant test. On the weekly chart, the index is currently piercing the monumental trend line that originates from the COVID lows in 2020. A weekly close above this line, followed by confirmation next week, could signal a major new leg up for technology stocks. Conversely, a rejection from this level could mark a significant top. The stakes are high, and patient observation is paramount.

NVIDIA Tests a Historic Trend Line

Nowhere is the battle between bulls and bears more clearly illustrated than on the chart of NVIDIA. The semiconductor giant, which has been a primary driver of the market rally, has just arrived at a critical point of resistance. This isn't just any trend line; it’s a line connecting the 2021 bull market high with every major subsequent peak. Yesterday, the stock tagged this line precisely at around $191.

“On NVIDIA, we are watching like a hawk. Does it get through this line? Or does it cause a rejection?”

History provides a valuable guide here. The last time NVIDIA was rejected from this trend line, the stock pulled back approximately $20, from about $184 down to $164. Previous encounters with this line resulted in even more significant corrections. This historical precedent underscores the importance of the current moment. A decisive breakout could propel the stock into a new parabolic phase, but a rejection could signal a much-needed correction for the market leader and, by extension, the broader tech sector.

Tesla’s Warning Shot: The Reversal Engulfing Candle

While NVIDIA is testing resistance, another market favorite, Tesla, just printed a powerful bearish signal. Yesterday's price action formed what technical analysts call a "reversal engulfing candle." For this pattern to be significant, certain criteria must be met: the stock must be in a sustained uptrend, making a new high for a significant period (Gareth uses a six-month lookback), it must gap above the previous day's high, and then reverse to close below the previous day's low. Tesla’s chart yesterday ticked every single one of these boxes.

This pattern is a stark warning sign. It indicates that the buyers who were enthusiastic enough to push the stock to new highs at the open were completely overwhelmed by sellers, who drove the price down throughout the day. It represents a potential exhaustion of the bullish trend.

However, a key principle of technical analysis is confirmation. The bearish signal remains valid only as long as the high of that candle is not breached. “As long as you do not have a daily close above this high, this is a bearish signal,” Gareth explains. If the stock were to rally and close above that high, the bearish signal would be completely negated. For now, it puts traders on high alert for a potential trend change in a stock that has recently enjoyed a powerful run.

October's Game Plan: Top Longs and Shorts

With the broader market context established, Gareth revealed his top trade ideas for the month of October, spanning both the long and short sides of the market.

Premier Shorts for October

Robinhood (HOOD): After a staggering 400% rally since its April low, Robinhood is looking parabolic. The stock is now pressing against the upper boundary of a well-defined parallel channel. A correction is likely, and importantly, the stock could pull back all the way to the $115 level and still technically remain in its long-term uptrend. This provides a favorable risk-reward setup for a short-term corrective trade. “For me, at least this is a great short for October,” Gareth stated. “I think it's coming back down at least to $115 over the course of the next four weeks.”
AppLovin (APP): This stock printed a classic blow-off top, touching $745 before starting to roll over. The chart suggests a significant correction is underway, with a potential target all the way down at the $500 level.
Caterpillar (CAT): The industrial giant has had a fantastic run, but it just tagged a major upsloping trend line connecting multiple significant highs. With growing evidence that the U.S. economy is slowing, the fundamental backdrop for construction and heavy machinery could weaken, making Caterpillar vulnerable to a pullback from this key technical resistance.

High-Probability Longs for October

Volatility (VXX): The VXX, an ETF that tracks market volatility, is coiled in a tight wedge pattern and appears ready for a breakout. Volatility has been suppressed at historically low levels, and such periods rarely last. A breakout from this pattern could send the VXX from its current price around $33.22 back towards the $40 level, making it an excellent hedge or speculative long for October.
The Pharma Sector (SRPT, VKTX): A classic sector rotation appears to be underway. As money flows out of expensive, over-extended technology names, it needs to find a new home. Beaten-down pharmaceutical and drug stocks are emerging as a prime destination. “Money flow is going to say, wow, tech is ridiculously expensive. Where am I going to park my money? And it looks like pharma and drug stocks are the place to be now,” Gareth noted.

Sarepta Therapeutics (SRPT): This chart is just starting to wake up, forming a beautiful base that looks like an inverse head and shoulders or a cup and handle pattern. A breakout is beginning, with a potential target of $35 to $36 in October.
Viking Therapeutics (VKTX): Exhibiting a similar pattern, Viking is just beginning to inch higher out of a consolidation phase. The initial target for this emerging move is at least $32.

The Psychology of Failed Moves

In his analysis of Bitcoin, which has successfully broken out and confirmed its move, Gareth shared one of the most powerful concepts in technical trading: the significance of failed patterns. Bitcoin’s new support is $118,000, with an upside target of $126,000 to $127,000. While the odds favor this move, it’s the lower probability outcome that traders must prepare for.

“The biggest moves come from failed moves,” Gareth emphasized. “When bullish patterns fail, there's usually massive drops. When bearish patterns fail, there's usually major spikes because honestly, what happens is a lot of people get caught offsides.”

This is a profound insight into market psychology. When a widely expected breakout fails, it traps a large number of traders on the wrong side of the market. Their rush to exit losing positions creates a cascade of selling pressure, leading to an outsized move in the opposite direction. This principle applies to all markets. If Bitcoin were to fail its breakout and fall back below $118,000, or if the Nasdaq were to fail its own breakout attempt, the resulting sell-off would likely be swift and severe.

Conclusion: Navigating October with a Clear Plan

As we head into the month of October, the market is providing a clear and actionable roadmap for disciplined traders. The intraday patterns reveal institutional selling into retail strength, the major indices are approaching make-or-break levels, and key market leaders like NVIDIA and Tesla are flashing important signals at critical junctures.

By identifying specific, high-probability long and short candidates, traders can position themselves to capitalize on potential sector rotations and corrective moves. Above all, understanding the probabilistic nature of the markets and the powerful psychology behind failed patterns provides a mental framework for managing risk and capitalizing on volatility. By blocking out the emotional noise and focusing on the pure, unadulterated data of the charts, traders can navigate the weeks ahead with confidence and clarity.