Hedge Fund Blowups, Semi's See Pressure, Oil Drops Giving Markets A Bid: Here Are The Trades

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My name is Gareth Soloway and I was a
losing trader until I mastered technical
analysis. Logic and charts [music] beat
hype and narratives every time. Now I
teach investors the same techniques that
made me a multi-millionaire. This is my
trading game plan.
Good morning everybody. Welcome to my
trading game plan. My name is Gareth
Soloway, chief market strategist here at
Verified Investing. And as always, we're
going to focus in on the data and the
charts, leaving all the narratives and
nonsense behind. So, what we're looking
at is a market on the S&P that is higher
this morning. The S&P futures are about
6/10 of a percent higher, and this is
mainly on the drop in oil. So, we saw
going into the weekend the threats of
major strikes against Iran, and then
President Trump came out and basically
said, "Nah, we're not going to do that
because negotiations are going to resume
on Monday." Now, Iran has denied that
claim, but honestly, it doesn't matter.
Oil is still falling sharply, which is
giving the markets a bid. And it's not
just oil, remember. It's the fact that
when oil falls, the 10-year yield and
rates come in because expectations for
inflation are adjusting downward. And
that's really important to understand
the connection right now between oil
going up or down and interest rates
because of the inflationary impact. So,
let's jump in here to the S&P futures
and take a look where they currently
stand. And what we could see here is
that S&P futures, we saw them open up on
Sunday night at 6:00 p.m. Eastern time.
We then traded kind of sideways the
entire night
coming into the opening bell today. And
again, the opening bell less than 30
minutes away.
Like I mentioned, that's a main
contributor factor to the fact that oil
is down as much as 9%
today, folks. That is a big drop in oil.
And again, we know that we hit gap fill
down here. We went up into my
multi-factor short level here. We then
collapsed, small bounce, and now we're
heading lower, which tells me there's a
decent chance that we're going to trail
off down into this level down here
around $70
a barrel. So, watch that $70 level over
the next, let's say, couple weeks.
That's generally going to be first
technical support. Now, again, is it
possible negotiations fall apart?
Absolutely. But, the closer we get to
the midterms, the more likely oil is
going to be pushed lower to get, again,
maximum votes. And obviously, there's
more incentive to strike a deal that is
obviously very beneficial to Iran
because the price of oil and gas is so
pertinent to voters in the midterms. All
right, so that's where we are right now
on the charts. If we take a look, we
mentioned how interest rates are
affected by oil. You can see today the
10-year yield is trading back down. We
are looking at a 10-year yield of 4.68%.
Now, that's still very, very high
overall. But again, it is coming in
mainly on the back of oil here. Now, the
10-year yield being so relative high,
and the 30-year and the 30-year's the
big one, right? I mean, that's
incredible to see the 30-year interest
rate at levels not seen since 2007,
which was just before the financial
collapse, the financial crisis. But,
nonetheless,
the reasoning behind why yields, even
with oil coming down, let's say to below
80, are still staying relatively high,
is because of all the factors that I've
discussed many times over. The US debt
continues to go up with no fiscal
restraint whatsoever. The Federal
Reserve, while Kevin Warsh talks a
strong game, there's literal literally
no firm action that he has said he's
going to take. And even after his last
speech, his last press conference, the
odds of a September rate rate hike,
which had been around 70 plus percent,
have actually come in here just a little
bit as well. In other words, people are
very doubtful. The market, the bond
market is more thinking he's a lot of
bark with no bite. Maybe he'll prove us
wrong, but that's what the markets are
thinking. All right, so we have that.
Now, let's go to a couple other things.
So, number one, um other big stories out
there, guys. The dollar fell overnight,
tagging this key trend line that I
showed you guys on Friday. And
ultimately, again, pivot low, pivot low,
pivot low, the dollar should get a
technical bounce here. We can see I have
this new trend line that I kind of found
here that I really like. This pivot high
uh low, pivot low, then we broke,
retraced, and then we've kind of come up
here as well. But essentially, the drop
on the US dollar here
tagged support. Now, this drop on the US
dollar is very intriguing, mainly
because of this chart right here. This
is the dollar yen.
The dollar yen has collapsed. What means
what this means is that the dollar
against the yen has lost significant
value in the last three trading days.
Now, what's going on here? Well, we know
that the dollar yen was on my top bingo
card for most risks to the market. And I
said intervention was likely. Now,
what's even more amazing about this
intervention is that it wasn't just the
Japanese Central Bank intervening, it
was also the US in joint force with the
Japanese Central Bank. So, again, the US
got together with Japan, which is almost
unprecedented, and said we need to
intervene
to strengthen the yen and weaken the
dollar against the yen. And they did it
jointly. Now, the reason, you might say,
"Well, what does the US care?" I mean,
why would the US care
if the yen gets weaker and weaker and
weaker? I mean, the dollar's strong,
isn't that good? Well, this is the
kicker, guys, is that ultimately it
comes down to what the chain reaction
could be if the yen continues to
collapse in value. Not only is it their
carry trade, which is a very important
with trillions of dollars
being dealt between the Japanese yen,
the US markets, and the European
markets, but if you have a major
currency like the yen collapsing, do we
think that's good or bad for other fiat
currencies, which generally are doing
the same thing as the Japanese Central
Bank and printing more money and running
up more debt? Now, the Japanese economy,
right? 240% debt to GDP, while the US is
less,
it's not really ridiculous
less. And other countries are on the
same path. And so, there may be this new
precedence to kind of backstop each
other's currencies because we know that
if a domino goes, guess what happens to
the other dominoes? They all go as well.
And so, this could be the warning shot,
the fact that the US is willing to also
intervene with the Japanese Central
Bank. That's a big indicator of one of
the reasons why long-term
I'm a huge bull on gold.
Huge bull. All right. Enough of that.
Let's get back to the charts here. The
S&P 500 daily chart. So, what we saw
last week was an incredible flush. We
closed just below this major trend line
that goes back to this pivot high from
the bull market of 2021.
And then, look at this. Comes in, hits,
bounces, hits, bounces, hits, and
actually closes below, but we didn't
confirm based on the methodology of the
Winning Trader Series. It didn't
confirm. Therefore, it's only a fake
out, not a breakout, not a breakdown.
And sure enough, we bounced right back
up. Now, the question is today, will we
go attack this upper line around 7555
to 60 on the S&P, and can we break out
and maybe confirm to the upside? Could
the market have one more leg to the
upside on the S&P? Well, if will
continues to come in, but the economy
here in the US stays strong, that might
be a possibility. Now,
a couple other things.
Later this week, we're going to get the
jobs data. That is going to be
incredibly important for whether or not
the Fed will be expected to raise rates
in September. That's the next meeting in
September, guys. So, watch that. It's
about 6 weeks away, that next Federal
Reserve meeting. I'll be watching the
Fed Watch Tool to see what the
predictions are later this week when we
get that jobs data. Okay. Next up, we go
into a couple other big charts. So,
interestingly enough, folks, one of the
big things that's going on is we're
seeing semiconductors falling to the
downside. All right. So, after a pretty
incredible bounce, I mean, think about
this. SanDisk pierced the thousand, and
then bounced up to 1400. That's a 40%
move in two trading days on SanDisk. And
then, it lost a lot of those gains and
went negative on Friday. It's down again
today. Major trend line here that we'll
have to monitor. But, a lot of this has
to do with deleveraging. And I'm sure
you guys heard about it. There was a
hedge fund run by
relatively young individual who had done
incredibly well leveraging the heck out
of going long the semiconductors. In
fact, he was doing something I did when
I was a newbie in trading, which was,
"Oh, well, let me just buy triple ETFs,
and just, you know, hey, I like this.
Let's just see if I can make a ton of
money." Now, it worked for him and his
hedge fund. His hedge fund, incredible
returns because he leveraged the heck
out of going long semiconductors.
Problem is, as we all know, the market
can be unforgiving, and it was. And in
this collapse in the semiconductors, he
basically got wiped out um to the point
where Citadel had to come in and buy his
distressed assets. And again, my feeling
here is that
he is not the only one.
All right? They say where there's one
cockroach, there's many cockroaches,
right? That's the big big saying as they
go. And the idea is is that you likely
have other funds that stupidly over
leveraged on this run and didn't take
profits, and they just were riding this
thinking that it would go on forever
like so many retail folks were. They
should have been paying attention to
what I was saying. But nonetheless, they
are now in a point of liquidating. And
that's forced selling due to margin
calls. And so, as much as these things
have declined, there's going to be
continued selling pressure with some
bounces in the near term because of this
deleveraging event. It's epic. I mean,
we're talking about hundreds of
billions, maybe more. So, watch that
here. But again, we are seeing names
like San Disk, Micron, and others that
are coming in today again, I will be
monitoring the 1,000 trend line right
here, right around this trend line with
gap filled just around that 1,000 level.
We'll see. I I did own Sandisk as I told
you guys in the smart money stocks
portfolio. I did take profits on it when
it popped up about 20% or so. I mean,
went back to about 1,200 and change. I
wish I held it to 1,400, but then again,
if I did, I'd be, you know, it'd be
coming in and and so forth. But, the
point is is that these will be
opportunities to swing trade. We just
got to be patient, all right? At least I
will be patient. Now,
couple other things to go over here.
Watch SpaceX this week. SpaceX, check
this out, guys. This is a very cool
chart. So,
this is what we call in the business a
measured move potential setup.
Okay? So,
we know SpaceX, there's a massive unlock
of shares coming. I think close to 100
million shares being unlocked when they
report earnings tomorrow after the bell.
But, the question is where is the buy
level? Because honestly, SpaceX is
getting close to $100 and I think it's
going to go below $100. But, once it
gets below there, I'm going to start
watching very closely because the
measured move is just below that. Let's
talk about it. The measured move here is
a low pivot to the high pivot, $75 move.
Then you had a retrace to that same 150
level, a small bounce, and then we've
gone straight down since, right? And the
idea is you take this $75 move and you
put it to the downside, and that gives
you a general target for a buy around 96
to 97. So, I'll be watching this if it
gets below 100, I'll be watching that
measured move level. Whether or not it
gets below on earnings or before
earnings, I don't know.
I have no idea how many insiders will be
dumping their shares
um once this thing is unlocked to that
tune of a hundred million shares, but
that to me on a technical basis is
likely where I'm going to be watching.
All right. Uh let's move on to gold.
Gold today was up a little bit retesting
this trend line of the wedge pattern,
but now as the dollar is bouncing a
little from Remember the US dollar
tagged technical support here. Right?
So, it should bounce. And so, as the
dollar has bounced in the current
period, we have seen gold then pull
back, which is what to be expected. So,
watch that, folks. I'm continuing to
watch. What's incredible is the wedge is
coming to a head. Basically, by
mid-August, it will be at a head. Price,
in other words, must break one way or
the other by then. So, we have less than
2 weeks to go until price must break.
Silver today, not looking good for
silver. The question is, can it hold
this 5480-ish level? If it comes down to
that, I still have it penciled in, and I
went over this in a video on my YouTube
over the weekend, over where silver is
likely headed based on past cycle
analysis. Incredible
um breakdown of the silver chart. And
again, it's almost following to a T the
past cycles in silver. Then we go on to
natural gas. Nat gas catching basically
a flat move today. It's just going
sideways. I still think there could be
one more move to the downside on natural
gas to get into this technical spot
price support. We'll watch that. And
then Bitcoin continues to struggle here,
folks. If we look at the trend line I
was watching on Friday, you have it
right here, and we continue to peak just
below support here. This is a really, to
me, important level. Can it bounce back
up? I really want to see it close at or
above 63,000.
That's the key level on Bitcoin. So,
watch that very closely. If this starts
to break down, it very well could go
back to these lows. And I did again, we
talked about this how while I'm
near-term neutral to bullish on Bitcoin,
I still don't think the bottom is in yet
for the cycle. All right, so again, we
likely have a move down. Worst-case
scenario is about 35,000 base on a head
and shoulders target, but that's
worst-case. I don't know if it'll go
that low. I think really 50 or just
below would be a kind of, you know,
starting to accumulate where I start to,
you know, dollar cost average all the
way down as low as it goes on Bitcoin.
And as always, folks, I just a reminder,
I am heavily diversified. Real estate,
even um more so land. I'm a big buyer of
land. I'm a big fan of that. Not so much
real estate homes because I think those
prices will go down, but ultimately from
stocks to crypto to commodities to bonds
all the way across. So, when I talk
about accumulating Bitcoin, it's within
the small percentage of my overall um
basically diversified portfolio. Um it's
never all in. I'm never all in. And and
to tell you the honest with you guys,
it's because
when I was younger, I did that and I got
basically I blew up so many times that
it's like, okay, well, how many times do
I have to blow up to realize that this
is not the right method to
grow real wealth. And finally, it sunk
into my head, right? I mean, it took a
long time, a lot of stupid errors. I'm
sure we've all done them or maybe
hopefully less than me, but just to be
honest, I mean, I've made every mistake
in the book more times than I'd care to
admit, and I still make mistakes, but
slowly it gets drilled into this noggin
right here that there's a better way for
real wealth building. And believe it or
not, singles and doubles, as well as
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thing. Be fighting for the little
investor. That's the key right here.
Even playing field. There's so much
shadiness out there, so much, you know,
the elites getting stuff before you and
I even have a chance to act on it. If we
can help a little bit, we're going to
help a little bit. Go have a great rest
of your day, guys. Thanks so much for
joining me today. I'll talk to you soon.
Take care.