TRADING GAME PLAN REVEALED: Window Dressing, AI Inflation & Key Charts

As a new week begins, the market is showing early signs of strength, a common occurrence as we approach the end of a quarter. This phenomenon, known as "window dressing," can create a deceptive sense of bullishness that often reverses as the calendar flips. In this morning's TRADING GAME PLAN REVEALED, Gareth Soloway, Chief Market Strategist at Verified Investing, peeled back the curtain on this institutional game, revealed critical technical levels on the major indices, and uncovered a looming inflationary threat driven by the artificial intelligence boom that could impact every household in America.

The End-of-Quarter Illusion: Understanding Window Dressing

For traders and investors, recognizing the subtle forces that influence market price action is paramount. One of the most consistent, yet often misunderstood, is the end-of-quarter dynamic of window dressing. As Gareth explained, this isn't about fundamental strength but rather about appearances.

"...window dressing occurs, it's hedge funds or money managers buying best performing stocks into quarter end to put it on their statements that go out to clients... This money manager must be absolutely phenomenal and therefore I'm going to keep my money with them because they're in the right stocks that have done so, so well all quarter long."

This practice serves a simple purpose: to make quarterly statements look as impressive as possible. Fund managers load up on the quarter's high-flyers—the NVIDIAs and Metas of the world—to give clients the impression that they were holding these winners all along. Conversely, they engage in "window undressing," selling off their losing positions so those poor performers don't appear on the statements.

This creates an artificial tailwind for top-performing stocks and headwinds for laggards in the final days of a quarter. However, the most crucial takeaway for traders is what happens next. Gareth highlighted a critical "reversion period" that often follows.

"Oftentimes, there's a reversion period where after you get the window dressing, there's kind of a void of buyers for a select group of best performing stocks, at least for the first few days of the new quarter."

This void of institutional buying can lead to a sharp reversal or pullback in the very stocks that were being aggressively bought just days earlier. This week, that reversion period aligns perfectly with major jobs data releases, including ADP on Wednesday and Non-Farm Payrolls on Friday, setting the stage for a potentially volatile start to October.

S&P and Nasdaq at Critical Junctures

While institutional games play out, the charts provide a map of the market's true technical health. Both the S&P 500 and the Nasdaq 100 are currently testing trend lines of immense significance.

On the S&P 500, the market is caught between two powerful forces. The overhead resistance is the former support trendline dating back to October 2023. In technical analysis, a broken support level, once confirmed, often flips to become new resistance. The market is now testing that principle.

Below, a more immediate and fascinating trendline is providing support. This line has been tested successfully an incredible six times. As Gareth noted, "Six times is impressive. There aren't many trend lines that last for this amount of hits before they break. Generally, you're coming into a time count." A "time count" is a technical concept suggesting that the more times a level is tested over a period, the higher the probability that it will eventually break. Each successful test weakens the resolve of buyers at that level, making a breakdown more likely with each subsequent touch.

The Nasdaq 100 presents an even more dramatic long-term picture. The index is currently pressed up against a massive trend line that originates from the COVID lows in March 2020. The history of this line is a stark reminder of its power:

First Test (July/August 2024): Resulted in a 15% pullback.
Second Test (December 2024): Led to a 25% drop.

The market is now at its third major test of this line. The weekly chart shows a "crisp" picture where the price pierced the line before being rejected—a classic sign of sellers defending a key level. The magnitude of the previous pullbacks from this line raises the stakes for the current test, making it a critical level for all market participants to watch.

The AI Inflation Bomb: Why Your Gas Prices Could Skyrocket

While traders focus on chart patterns and Fed policy, a powerful new inflationary force is building, and its source may be surprising: the AI revolution. Gareth highlighted a deeply concerning pattern developing in the chart for gasoline (UGA).

"This is a bull flag. This is an incredibly bullish pattern formation. And we're right nearing the upper end of a potential breakout... What's scary about this is that gasoline potentially has 80% upside."

An 80% surge in gasoline prices would have a devastating impact on household budgets and the broader economy. What's driving this potential move? It’s not a booming global economy. Instead, it’s the colossal and rapidly growing energy demand from AI data centers.

"The amount of energy that one of these will soak up is almost the amount that Manhattan is using on a daily basis... we're going to be paying for these data centers essentially via energy costs, really crazy stuff."

These are not small server farms; they are sprawling complexes, some covering 12 square miles. The power required to run the processors and cooling systems for these AI behemoths is creating an unprecedented strain on the energy grid. This demand is set to grow exponentially as more data centers come online globally over the next few years. This could create a sustained inflationary pressure that central banks will struggle to control, as it's driven by technological infrastructure rather than traditional economic cycles.

Gareth drew a compelling parallel between the current gasoline chart and the multi-year consolidation gold experienced before its massive breakout. Gold traded sideways for years, building energy in a bull flag-like pattern before exploding higher. The gasoline chart is exhibiting a strikingly similar structure, suggesting a major move could be on the horizon.

High-Probability Setups in Key Stocks

Amid the broader market currents, specific stocks are forming compelling technical patterns that offer high-probability trade setups.

Goldman Sachs (GS): This chart presents a textbook example of a multi-factor resistance level. The stock recently formed a "topping tail," a bearish reversal candlestick pattern where price spikes to a new high intra-day but is aggressively sold off to close near the low. What makes this signal so powerful is where it occurred.

"what's fascinating about this chart is that you also have this trend line that the topping tail at the high tagged. And those type of things, my friends, those are major because it's two factors in one."

When two independent technical signals—a bearish candlestick pattern and a major trendline—converge at the same price, the probability of a reversal increases dramatically. This makes Goldman Sachs a prime candidate to watch for a significant pullback over the next few months.

Apple (AAPL): Interestingly, Apple has begun to act as a "defensive" name within the tech sector. While high-growth names rally, Apple often remains flat, and when money rotates out of those high-flyers, it can flow into Apple. The stock has been trading within a remarkably clean parallel channel since 2020. While not a buy at current levels, a potential move to the top of this channel, around the $280 level, could present a future shorting opportunity.

Meta (META): The social media giant has triggered a classic Head and Shoulders topping pattern, a formation that often signals a major trend reversal. With a confirmed close below the pattern's "neckline," the technical setup is now active. The measured move target, calculated from the height of the pattern, points to a potential decline to around $650 USD—a drop of approximately $100 from the breakdown point.

Precious Metals: A Tale of Breakouts and Tactical Shorts

The precious metals complex is alive with activity. Silver has been a "rock star," charging towards its major historical resistance zone between $48 and $50 USD, levels that capped the rallies in 1980 and 2011.

This setup provides a perfect opportunity to understand the mindset of a professional technician. Despite being bullish on silver's run, Gareth has already identified a precise level for a potential swing trade short. This unemotional, probability-based approach is the hallmark of a seasoned trader.

"A true technician has no emotional attachment to anything. Doesn't matter. All right. If something goes high enough, we short it. If something goes low enough, we buy it. Just the nature of the beast."

By connecting the 1980 and 2011 highs, a slightly ascending trendline emerges. This line projects a target just under $51 USD. A hit of this multi-decade trendline would be a prime spot to initiate a short position, looking for a 5-10% pullback.

Elsewhere, Gold is piercing the top of its parallel channel, with a clean break potentially opening the door to a run toward $4,000. Platinum has already staged a beautiful breakout and is targeting higher levels around $1,730 and $1,880.

Bitcoin's New Channel

Bitcoin's price action has been volatile. A bearish Head and Shoulders pattern that triggered last week was swiftly negated by a surge over the weekend. This is a crucial lesson in trading: analysis must adapt as new price information becomes available.

In place of the old pattern, a new one has emerged: a clean, downsloping parallel channel.

Upside Resistance: The top of the channel currently sits around $116,000.
Downside Support: The bottom of the channel is near $100,000.

For now, Bitcoin is contained within this structure. A confirmed break above $116,000 would signal a likely push to new all-time highs. However, a break below the $100,000 support level would reactivate downside targets, pointing back to the $90,000 zone.

Conclusion: Navigating the Quarter-End Crossroads

The market is at a fascinating crossroads. The artificial buying from end-of-quarter window dressing is providing a temporary lift, but this is set to fade just as critical jobs data hits the wires. Major indices are testing technical levels that have historically produced significant pullbacks, while a new and potent inflationary threat from AI energy demand is quietly building in the background.

As we transition from September to October, the game plan is clear: respect the technical levels, be wary of the quarter-end illusions, and prepare for the volatility that earnings season will bring. By focusing on multi-factor analysis and maintaining an unemotional, probability-based approach, traders can position themselves to navigate the opportunities and risks that lie ahead.