Trading The Close Market Recap - 02/11/2026

The markets are often described as a mechanism designed to fool the majority of participants, and today’s price action served as a textbook example of this phenomenon. With Pro Trader Drew Dosek away, Pro Trader Lawton Ho stepped in to host the Trading The Close, breaking down a session defined by deceptive strength, "bull traps," and critical technical rejections.

Despite a jobs report that came in better than expected—showing unemployment down slightly—the market’s reaction was counterintuitive to the untrained eye. What began as a celebration of economic resilience quickly morphed into a broad-based selloff, leaving many retail traders trapped in high positions. Today’s analysis dives deep into the psychology of this "pop and drop" dynamic, the specific technical wedges forming on major indices, and the precise levels to watch in the semiconductor, airline, and software sectors.

The Anatomy of a Bull Trap: S&P 500 and Nasdaq Analysis

The trading session opened with a surge of optimism. The S&P 500 gapped up, opening approximately 0.67% higher than the previous close, seemingly poised to challenge new all-time highs and looking toward the 7,000 level. However, the intraday action told a very different story.

As Lawton explained, the market executed a classic "rug pull" scenario. After luring buyers in with the morning gap-up, the S&P 500 sold off over 1% from the open, eventually closing the day virtually flat. This price action is particularly dangerous because it leverages the "fear of missing out" (FOMO) against retail traders who chase the morning strength.

"Everything sold off while it looked bullish. It looked like it was going to make new all-time highs. It sold off actually… and closed the day virtually flat for the day."

The Wedge Pattern Conundrum

Technically, the S&P 500 remains trapped within a wedge pattern. These formations are characterized by converging trendlines and often precede significant volatility. The danger in the current setup lies in the potential for a false breakout. Lawton outlined a scenario where bullish news early next week could push the index to a marginal new high—triggering a "bull trap"—before a sharp breakdown occurs.

A similar structure is visible on the QQQ (Nasdaq 100). The index is respecting a strict trendline that acts as the bottom of its wedge. This support level has been tested repeatedly—on Monday, yesterday, and again today. Despite opening higher and touching the trendline, the QQQ succumbed to selling pressure, dropping over 1.4% from its highs before clawing back to a slightly positive close.

The resilience of these indices in the face of selling pressure is notable, but the repeated testing of support trendlines suggests that the bulls are losing their grip. When a support level is tested too frequently, it often weakens, increasing the probability of a breakdown.

Semiconductors: Riding the Parallel Channel

The semiconductor sector, tracked by the SMH, continues to be a focal point for momentum traders. The technical structure here is defined by a clear upsloping parallel channel. The support line for this channel traces back to the "Liberation Day" lows and connects through November 21st, while the upper resistance is defined by the pivot highs from January 29th and consolidation zones from October of last year.

Today’s action in the SMH mirrored the broader market: a significant gap up of over 2%, followed by a "pop and drop" that saw the index sell off more than 2% from the open. Despite this volatility, the SMH managed to close positive.

For traders looking for strategic entries, the upper bound of this channel is the key area of interest. Lawton was definitive about his approach to this sector:

"If the semis continue to push up, make new all-time highs tomorrow, you know that I'm 100% going to short this."

This strategy relies on the high probability of rejection at established technical resistance. Rather than chasing the breakout, disciplined traders wait for price to extend into resistance zones where the risk-reward ratio favors the downside.

Turbulence in the Skies: Airline Sector Weakness

While the broad markets fought to stay flat, the airline sector experienced significant turbulence, driven by a combination of technical breakdowns and fundamental headwinds. Reports of JP Morgan predicting a recession and downgrading airlines, coupled with operational issues like the two-week airport closure in El Paso, weighed heavily on sentiment.

American Airlines (AAL): The Head and Shoulders Pattern

American Airlines presents one of the most compelling—and bearish—technical setups in the market right now: a massive Head and Shoulders pattern. After opening nearly 1% higher, the stock succumbed to selling pressure, dropping over 5% intraday.

The critical level to watch is the neckline of this pattern, located around $13.71. A confirmed break below this level would trigger a measured move based on the height of the pattern (from the head to the neckline).

"If it were to trigger around here on $13.71… What is that measure move? About a 27% drop, basically to those lows in June."

This projected move targets the "Liberation Day" lows of approximately $8.45. While the right shoulder is still forming, the severity of today's selloff suggests that the bears are gaining control.

Delta Airlines (DAL): All-Time High Rejection

Delta Airlines offered a different but equally cautionary tale. The stock actually made brand new all-time highs today, pushing into the $75-$78 area, before reversing sharply to sell off over 5% from the open. This is the definition of a "bull trap"—a move that looks like a breakout, triggers buy orders, and then immediately reverses, trapping longs at the absolute top.

Support levels for Delta are now clearly defined. The first major level of interest is the gap fill just under $70. If that level fails, the next support zone sits at $64.50.

Software Sector Volatility: Earnings and Opportunity

The software sector has been under immense pressure, with many names falling over 29% in just a trading week. However, this volatility creates opportunities for traders who know where to look.

Robinhood (HOOD)

Robinhood’s earnings report created a rollercoaster of price action. Despite beating earnings expectations, a revenue miss caused the stock to plummet, trading down over 13% at its peak before recovering to close flat.

For swing traders, patience is paramount. Pro Trader Lawton advised against touching the stock for a swing trade at current levels, instead identifying a "nibble zone" significantly lower:

"I would maybe start nibbling with around the $50 to $45 range and continue adding all the way down to $30."

AppLovin (APP) and Unity (U)

AppLovin (APP) saw a bounce at a precise technical level: $409. This level corresponds perfectly with the high pivots from February 4th and 6th. However, if the stock rallies from here, resistance at $469 presents a potential shorting opportunity.

Unity Software (U) displayed extreme volatility, opening down 27% before staging a massive intraday recovery to close near its opening price. For long-term accumulation, the "Liberation Day" lows around $15.22 remain the gold standard for support.

Crypto and Commodities: Lines in the Sand

Beyond equities, the crypto and commodity markets are testing pivotal levels that could dictate their trends for the coming months.

Bitcoin and Ethereum

Bitcoin is currently trading in a potential bull flag formation—a move up followed by sideways-to-downward consolidation. This pattern often resolves to the upside. The key resistance remains at $80,000, while support is firm at $60,000. As long as Bitcoin holds above $60,000, the bullish thesis remains intact.

Ethereum continues to mirror Bitcoin’s movements, finding its own "line in the sand" at the $1,800 level.

Precious Metals: The Ceiling

Gold and Silver are both struggling to maintain momentum above key psychological and technical barriers.

• Gold: The metal has been repeatedly rejecting at the $5,100 level. While it briefly breached this level today, it struggled to hold. The inability to sustain price action above $5,100 suggests that a temporary top may be in.
• Silver: A similar dynamic is playing out at the $90 level. Despite multiple attempts to push through, silver continues to be rejected here. A breakout could open the door to $108 or $110, but for now, $90 acts as a formidable ceiling.

Conclusion: Discipline Over Emotion

Today’s market action serves as a reminder that price often deceives before it reveals its true intention. The "bull traps" in the S&P 500 and Delta Airlines, the "pop and drop" in semiconductors, and the volatility in software earnings all underscore the importance of waiting for confirmation and trading off specific, predetermined levels.

As Pro Trader Lawton Ho demonstrated, successful trading isn't about guessing the news; it's about reacting to price action at key technical junctures. Whether it's waiting for American Airlines to break $13.71 or waiting for Robinhood to hit $50, the edge lies in patience.

For traders navigating the chaos of earnings season, Lawton also announced the launch of his new "Earnings Levels" service, designed to provide pre-market and post-market levels to help traders navigate volatility with structure rather than emotion.

As we look toward tomorrow’s session, the return of Drew Dosek will likely bring further analysis on whether these wedge patterns will break down or if the bulls have one last trap to set. Until then, keep your levels marked and your risk managed.