Alert This Is How Every Market Top Begins

Hey folks, welcome to verifiedinvesting.com. My name is Gareth Soloway, Chief Market Strategist here. Now, in today's video, we have to dive into the stock market. Today, the stock market is down. Now, this morning, it started to the upside, but gave back those gains. Now, while certain AI stocks are still pushing up, we are seeing the breadth of the market deteriorating in a major way. What do I mean by that? Well, Microsoft's down big, Netflix down big, Amazon's down big, Google's down big. So, anything that is not specific to chips directly, and even within chips like memory or storage, we are seeing starting to collapse down. Now, there is a pocket of strength in financial stocks. Why? Because financials do well in a higher rate environment. And so, again, the financials now are factoring in or investors are factoring into the financial stocks that rates will remain where they are or higher for longer because of inflation, because of the way that Kevin Warsh has discussed the new chairman of the Federal Reserve. And so, that is a positive for them. But even those stocks are getting overbought substantially. Now, in terms of the charts, we're watching on the S&P. Do we have a lower high in the works? Last week, we did get a lower high, but we haven't confirmed it yet. Let's dive into these charts right now. Here's the S&P. The S&P is down a half percent on the day. Again, just a week or so ago, we talked about this pullback low here, then the big move up, then this pullback gave us a lower low, right? Low and lower low. That's step one of a market top. Step number two is when you get your bounce, do you put in a lower high? Now, again, this looks like a lower high, but notice how we really haven't pulled back much yet. And so, I don't know yet if this is just a move up like this with bullish consolidation, where we're going to go like that, or is it a more significant pullback? And I want you guys to really understand the difference maker here, because this is huge. This is the difference between a market top or just bullish consolidation before the market rips up again. And so, just to reiterate, what we're looking at here is we have a high, but from that high, that's determining if it is a lower high, meaning that you need to see a move down. And really, ideally, you want to see this low get taken out. Then it confirms this as an up move and a down move. See how that's like a mountain peak right there? That's what you're looking for, okay? So again, if we look back at prior levels, we can very clearly see here you had a mountain peak, and we went higher. So, we had a high and a higher high. And on the vice versa side, we had a very distinctive pullback, valley low, then it went up, and then a lower low. So, this is a confirmed lower low. There's no debating that, right? What we're now trying to focus in on is are we going to get that confirmed lower high? And if we do, then technical analysis dictates that the probability, and remember, we deal in a world of probability, that then signals the probabilities favor a market top. And as always, folks, I'm always zeroed in on this because, again, where the market tops is incredibly important because you'll have people buying the dip every drop we get and then bounce. But once you start making lower highs, then anyone buying the dip and then we make a lower low again is going to be out of the money. Great example of this is SpaceX, right? So, SpaceX, the VWAP, the volume weighted average on SpaceX, meaning the average price that people got in on SpaceX, and this was before today, was an average price of 181. This is the average. This is where most people own it here. Or, again, the average person is owning it right around here. They are now down on this. And this, again, you had to look at the selling here, the institutional selling right up here as a signal. And so, while people might be buying the dip on SpaceX, this is not a good scenario because what ends up happening here is that if SpaceX bounces, and inevitably it will, and it gets back in the money, there are going to be a certain amount of people that bought up in this range, right? Anywhere between 228 and really, I mean, let's even say 200 right down here, okay? Now, those people are like, oh my gosh, I'm down 30%, 35%, 40% on my investment in SpaceX. So, if SpaceX bounces, there's going to be a certain amount of sellers on this heavy volume day that are going to sell into that, and that's going to make it very hard for price to go back to all-time highs. And my fear is this. I mean, number one, we're filling this gap, incredible gap fill, but if we take out this low at 149, 150 from the IPO day, then everyone who bought since the IPO would be now negative. Now, granted, insiders, good old insiders that got these shares, probably some of them are selling or have sold and taken profits, but then those are the only players that are still in the money. And even at that price, I mean, it came, they got it at 135. If they're still holding, they're not really up that much, right? They're not up a whole lot. Now, going back to the overall markets, let's take a look. So, the S&P 500 right now down about just under half a percent as we continue to see it kind of hovering here, but more importantly, look at the QQQ. The NASDAQ is actually still at a lower high as well, but the question is, will it remain that? And one of the things I brought up to you guys that I thought was so, it's becoming so blaringly obvious is when you look at even Google, Amazon, Microsoft, Meta, these stocks are getting crushed. And what this tells us is the breadth of the market. So, I mean, the NASDAQ 100 is 1% off all time high, 1.5%. I mean, it is very close. And breadth means what's carrying the market to the upside is now razor thin. And historically, if you look at major tops in markets, dot-com bubble, the real estate bubble before the financial crisis, even before COVID, the COVID collapse, the underlying market internals were unbelievably weak, and we're seeing that now in the charts. So, just to give you an example, look at Google today. I mean, Google is down 5.5% on the day. That's a big drop. And look, I mean, this thing has now been making, here, look, look at this guys. Low, here's a high, higher high, low, but look, low, lower low, it made a lower low there. Then we had a small bounce. So, lower high, lower low, lower high, lower low, equal high, lower low, but you're still making lower lows. This is very clearly in a downtrend. Look at Microsoft. Microsoft had that great bounce recently here, but look at this sell-off on Microsoft. Again, high, lower high, okay, and then low, lower low. You see how this is telling? So, essentially, the thesis or the power of this educational video today is to start watching for that flip. Where do we get lower lows and then also lower highs? Because if you paid attention to that on Microsoft, while even the institutional and analysts were continually upgrading, low or high, lower high, low, lower low, right here. All right, right there, this thing is topped. So, instead of buying the dip here and being like, oh, I'm in the money, I'm in the, oh crap, I'm not in the money anymore. You knew to stay away. Okay, watch for that, folks. It is unbelievably important. All right, now going to Meta. Meta is another great example. Now, Meta has gotten a little sloppier here, but still way off the highs, but look, it was very apparent. High, low, okay, and this was still a higher low, right? Because low, higher low, high, lower low, but look, lower high, lower low. And so, if you bought the dip here, that's okay, but you aren't holding for new all-time highs. You're holding for a bounce, you get the heck out, and then look at what happens, price collapses. That is absolutely imperative. All right, and the reason I bring this to you guys' attention in this day and age, in this video, is precisely because we may be on the verge of that, and there's so much of a mentality of buy every dip because we'll just make new all-time highs. I mean, heck, I've heard everything in the book from, you know, the president will never let the market go down, and by the way, if he had a choice, he would never let it go down. I agree with that. There's just something historically that says, at some point, he can't even stop the market. Now, you might say, yes, he can. Well, guess what? And I remember this vividly because I was trading, you know, I've traded since the late 90s dot com, but in 2008 and 2009, even the Federal Reserve came out. They banned short selling of banks in 08, 08, 09, and the banks still fell and the market still collapsed. Like, there was literally, the Fed did things, and they started TARP, all these other things, and in the short term, the market still even went down, meaning that eventually, when you have a bubble that's created that becomes so massive, it doesn't even matter. Eventually, when it blows up, it just blows up, and people just run for the exit, and usually, unfortunately, it's institutional money running with retail buying the dip, and then eventually, at the bottom, that's when retail panics and dumps. All right, but we can look at Amazon. I mean, look at this. Look at this price action on Amazon. High, lower high, or high, low, lower high, and then obviously, way to lower low, but look, it even made a lower low today. Now, while this could get a little double bottom bounce, you can see the support. This tells me it's most likely going down. Now, you could get a bounce here, which we talked about on the other charts, right? Like, if you played the bounce, that's fine, but looking for it to go to new all-time highs in the short term when you have lower lows and lower highs is not ideal, all right? And even NVIDIA today, I think NVIDIA is, yeah, NVIDIA is down today. High, lower, or low, lower high, lower low, and look, bear flagging. This is gonna break down. Gonna break down, guys. All right, listen. I don't wanna beat a dead horse. Don't forget, guys, this is incredible stuff. I dropped my major, I mean, I do education in this. I dropped a video for only members of my Gareth's Top Squad, which is right here on YouTube. This is my YouTube premium. It's only 10 bucks a month, and I dropped two member videos a week. This coming weekend, I'll be doing a discount code just for you guys as well, but again, if you haven't joined, joined up. The alpha is incredible. You think the alpha's good here? Just wait till you see what I drop for members. All right, go have a great rest of your day, guys. Thanks so much for tuning in. I'll talk to you soon. Take care.