My Trading Game Plan Revealed - 02/12/2026: S&P 7000 Resistance and RSI Divergence Signal Pullback

With the S&P 500 testing the psychological barrier of 7,000 and the markets digesting a complex mix of rosy jobs data and looming inflation reports, traders find themselves at a pivotal crossroads. In this morning’s episode of My Trading Game Plan, Verified Investing’s Drew Dosek, filling in for Gareth Soloway, dissected the technical realities beneath the headlines. From the "sell the news" reactions in earnings to critical divergence patterns on the major indices, the charts are signaling that caution—not exuberance—is the prudent strategy.

The S&P 500: The 7,000 Wall and RSI Divergence

The S&P 500 has reached a defining moment, hitting a massive resistance wall at 7,000. While the index has briefly pushed through this level intraday, it has failed to confirm a close above it, signaling significant overhead supply and psychological resistance.

The price action reveals that the market is trading within a large, inclining parallel channel that has contained the index since late October. For months, the SPX has hovered within 1% of this 7,000 level, engaging in a prolonged period of consolidation. While consolidation often precedes a breakout, the technical indicators suggest a different narrative is unfolding beneath the surface.

The most concerning signal comes from the weekly timeframe, where a classic bearish divergence has formed between price action and the Relative Strength Index (RSI).

Understanding the Historical Warning Signs

To understand the gravity of the current setup, we must look at historical precedents. Drew pointed out two specific instances where similar technical conditions led to steep declines: December 2021 and the transition from late 2024 into 2025.

In both instances, the market made higher highs in price while the weekly RSI made lower highs—a phenomenon known as negative divergence. This signals that the momentum driving the price upward is exhausting, even as the index hits new peaks.

As Drew noted in the analysis: "History is showing that we should actually have price action retreat in the near term rather than going up and busting through, making new all-time highs. We'll see if that turns out to be the case, but odds are favoring more of a pullback in the near term."

Currently, the market appears to be engaging in "trickery," lingering near the highs to trap late bulls before a potential reversal. The technical probability favors a retreat from this parallel channel resistance rather than a sustained breakout.

Leading Indicators: Transports and Semiconductors Flash Warnings

While the headline indices hover near highs, the internal engines of the market—transportation and technology hardware—are flashing warning signs.

The Dow Jones Transportation Average (DJT)

The Dow Jones Transportation Average is often viewed as a canary in the coal mine for the broader economy. If goods aren't moving—whether by rail or 18-wheeler—economic activity is stalling. Yesterday, the DJT put in a "daily topping tail," a candlestick pattern that indicates a rejection of higher prices.

This reversal occurred after the index approached the target of an inverse head and shoulders pattern at 20,505. Having come within 400 points of this measured move, the index has effectively reached the "warning track" for profit-taking. The failure to push through, combined with the topping tail, suggests that the Transports are due for a pullback, which historically drags the broader market down with it.

Semiconductor Weakness (SMH)

Similarly, the Semiconductor ETF (SMH) is exhibiting what is known as a "sleeper hold pattern." Despite gapping up in pre-market trading, the sector is driving into double-top resistance following an accelerated move.

When a sector runs up too fast and hits major resistance, the likelihood of profit-taking increases exponentially. The technicals imply near-term downside for the SMH, with a first support target at $405. For traders, this serves as a reminder that gaps up into resistance are often selling opportunities, not buying signals.

Crypto Markets: The Path to Capitulation?

The cryptocurrency markets remain a hotbed of volatility, with Bitcoin currently trading around $67,925. While the daily RSI has bounced from oversold conditions (dipping under 30 and reclaiming it), the strength of the bounce is waning.

The technical structure suggests that the crypto winter may not be fully over. Bitcoin has broken down below a key pivot area established between April and November 2025. While a near-term bounce to retest this breakdown zone is possible, the medium-term outlook remains bearish until specific lower targets are hit.

The Weekly 200 SMA: The Line in the Sand

The most critical level for Bitcoin remains the Weekly 200 Simple Moving Average (SMA), which currently sits at the bottom of a parallel channel around $58,225.

"That, for me, needs to get tagged before we can start talking about another bull run in crypto," Drew explained. "I think the selling pressure for the medium to longer term is not done yet."

Looking further out, the analysis suggests a potential cycle low later in the year, possibly around September or October, with targets potentially dipping into the sub-$50,000 range, or even toward $40,000.

Ethereum’s Correlation

Ethereum mirrors this setup. After a massive run from $1,500 to $5,000, it has retraced nearly the entire move. While it recently bounced off the bottom of a parallel channel, the risk of a breakdown remains if Bitcoin heads toward its targets.

If Bitcoin approaches the $50,000 level, it would likely drag Ethereum down to major support at $1,300 or $1,400. This zone would represent a "heck of a discount" for long-term accumulation, but patience is required to let the price come to the level rather than chasing premature bounces.

The "Sell the News" Phenomenon in Earnings

This earnings season has provided a masterclass in market psychology, specifically the "sell the news" phenomenon. Stocks that have run up significantly into earnings are being punished, even when they deliver double beats on revenue and earnings per share (EPS).

APP and Cisco: A Tale of Two Beats

Both APP and Cisco reported strong numbers, beating expectations on both top and bottom lines. Yet, both stocks faced immediate selling pressure.

• APP: The stock had rallied over 20% from February 5th leading into the report. Despite the beat, it was slammed down. Traders looking for opportunities should watch the gap fill at $406.72 for an aggressive day trade, or the inclining trendline at roughly $370 for a higher-probability swing trade bounce toward $418-$420.
• Cisco: Similarly, Cisco ran up nearly 20% into earnings. It is now trading under $80 after closing at $85.54. Support levels to watch are $77.35 and a stronger trendline support just under $75.

Drew summarized the psychology behind these moves perfectly: "Whenever you see this on charts, guys, be mindful that yes, even though the earnings may be good… if that stock has run up too much into the earnings report, you're likely going to have a lot of profit-takers eager to go ahead and take the profit and reevaluate where the price action is once the dust settles."

This reinforces a core tenet of technical trading: Price action and positioning often matter more than the fundamental data itself. When a stock is "priced for perfection," even good news can trigger a sell-off as smart money liquidity exits positions.

Commodities: Oil Breakout vs. Precious Metals Chop

A distinct divergence is occurring within the commodities complex. While precious metals are stuck in consolidation, energy markets are showing renewed strength.

US Oil Breaks Out

US Oil has confirmed a breakout above a declining trendline, shifting probabilities toward further upside. The technicals point to a resistance target of $68.94, with the breakout point at $62 now acting as support. This strength in energy stands in contrast to the broader market hesitation.

Gold and Silver Stagnation

Gold remains trapped in a sideways chop, held down by a pivot from January 29th. It is trading within an inclining parallel channel, with resistance at $52.73. The key level to watch is the yellow trendline cutting through price action on Drew’s chart; a break below this median line would signal increased downside pressure.

Silver looks even more precarious in the near term. Having broken a near-term inclining trendline and failed at the retest, it faces resistance at $88.10. The charts suggest a potential drop to the longer-term inclining trendline at approximately $64.60 before a sustained bounce can occur.

DraftKings: Analyzing the Setup Before Earnings

Looking ahead to this afternoon's earnings, DraftKings presents a compelling technical setup for those willing to be patient. The stock has already suffered a significant decline from $35 to $26.50 since the start of the year.

While the RSI is showing some oversold conditions (poking back above 30), the chart suggests the selling may not be exhausted. A declining trendline connecting pivots from November 2024 and April 2025 points to a potential support shelf at $20.

This $20 level aligns with major pivot highs from 2022 and 2023, making it a "fantastic level" for a potential swing trade entry. Rather than gambling on the earnings reaction, disciplined traders wait for price to hit these high-probability zones where risk-reward ratios are most favorable.

Conclusion: Discipline in the Face of Volatility

As we await tomorrow's core inflation data, the message from the charts is clear: do not chase. Whether it is the S&P 500 hitting the 7,000 wall, Bitcoin failing to reclaim key averages, or earnings winners getting sold off, the market is punishing complacency.

The "sleeper holds" in semis and the topping tails in transports are the market's way of signaling a potential shift in character. By focusing on specific technical levels—like the $58,225 weekly SMA on Bitcoin or the $20 support on DraftKings—traders can navigate this volatility with logic rather than emotion.

The market will always offer another trade. The goal is not to catch every move, but to catch the right moves at the right levels. As the economic data rolls in and the technicals tighten, maintaining strict adherence to the charts remains the only way to consistently profit in this environment.