Trading The Close Market Recap - 02/23/2026: AI Disruption & Tariff Spike Rattle Markets — S&P 500 Tests 6,800

The markets are facing a dual threat that has rattled investor confidence and sent major indices tumbling. In this afternoon’s Trading The Close show, Pro Trader Drew Dosek at Verified Investing broke down the two dominant narratives driving price action: the escalating disruption of Artificial Intelligence in legacy sectors and the renewed geopolitical uncertainty surrounding tariffs.

As we navigate the trading session of February 23, 2026, the landscape has shifted significantly. With tariffs increasing from 10% to 15% and the European Union pausing trade deals, the global economic picture is becoming increasingly opaque. As Drew noted, "When investors don't have certainty, they're likely hitting the sell button."

Today's analysis goes beyond the headlines, diving deep into the technical damage inflicted on the S&P 500, the flight to safety in precious metals, and the specific technical levels to watch as AI reshapes the valuation of software and banking giants.

The S&P 500: A Historical Warning Track

The S&P 500 closed down 1.04% on the day, a significant move that saw selling pressure dominate the first two hours of trading. While the index managed to hold above a critical inclining trend line—currently sitting at 6,800—the technical posture of the market is showing signs of fatigue that mirror dangerous historical precedents.

Technically, the index is beginning to accumulate price action underneath the 50-day moving average. In strong bull markets, dips below this average are typically bought up rapidly, often within three days. However, the current price action is lingering, suggesting a change in character.

Drew highlighted a concerning parallel to the market top we witnessed a year ago:

"Let's go back further on the charts and see when we had something happen, much like what's going on right now… right here in December of 2024, going into 2025. You can see price action, it gets down underneath this 50 moving average, looks like it was about to break down lower… before we had a bigger fall later in February."

This "warning track" behavior suggests that the market may be setting up for a more significant correction. The coincidence of the dates is striking—we are nearly exactly one year removed from the peak that preceded the selling pressure of early 2025. With "Tariff 2.0" now in play, the 6,800 level on the S&P 500 has become the line in the sand. A breach of this trend line could trigger a cascade of selling as stop-losses are hit and algorithmic trading programs flip to net short.

Dow Transports: The Leading Indicator Fails

One of the oldest tenets of technical analysis is Dow Theory, which suggests that the Transportation Average must confirm moves in the Industrials. Currently, the Transports are flashing a warning signal. After attempting to consolidate and build momentum to break through a large red candle from previous sessions, the Transports failed today, pushing down toward the lower 50% of that range.

If the Transports cannot hold support at 18,550, the probability of a broader market decline increases significantly. The next major support level sits at 18,246. Traders should view the weakness in Transports as a leading indicator; if the entities responsible for moving goods are seeing stock price compression, it often presages a slowdown in the broader economy.

The Flight to Safety: Gold and Silver Shine

While equities faced a sea of red, the "fear trade" was in full swing. Uncertainty drives capital toward tangible assets, and today’s price action in precious metals was a textbook example of capital rotation during times of geopolitical stress.

Gold surged 2.38%, reacting to both the tariff news and lingering tensions with Iran. The metal is now securely trading in the top 50% of its parallel channel, with a technical target of $5,321. This move confirms that institutional money is seeking shelter from the volatility plaguing the equity markets.

However, the real star of the session was Silver, which exploded upward by 4.64%.

"Not entirely out of the woods yet, though… This is a mammoth parallel, guys. So this area should be very good resistance for silver."

Silver is approaching a massive resistance level at the top of a long-term weekly parallel channel. The high end of the previous red candle sits at $90.39. This is a critical juncture for the metal. A breakout above this level, followed by a confirmation close, would flip a multi-year resistance zone into support, potentially unleashing a new leg of the bull market for silver. Conversely, a rejection here could lead to consolidation. For traders, the play is to watch the reaction at $90.39 closely—bulls want to see an explosion through this level, while bears will be looking for exhaustion.

AI Disruption: The COBOL Crash and IBM

The narrative of "AI Disruption" took a tangible toll on legacy tech today, specifically targeting IBM. The news that Anthropic has created cloud code designed to automate the modernization of COBOL—the decades-old programming language that underpins the vast majority of global banking mainframes—sent shockwaves through IBM's stock.

IBM collapsed 13%, slicing through support levels that had held for months. The stock barreled through the $225 support, fundamentally altering its technical chart. This is a prime example of headline risk manifesting as technical damage.

For traders looking at the wreckage, the first level of resistance on any bounce will now be the previous support at $243.80. The concept of "polarity" in technical analysis dictates that broken support becomes new resistance.

"This is a major disruption to this company, likely going to be hurting margins as a lot of investors jumped off of a cliff literally today, getting out of IBM."

With the daily RSI plummeting to 22.84, the stock is deeply oversold, suggesting a technical bounce is possible. However, the structural threat to IBM’s moat—its dominance in maintaining legacy banking systems—suggests that any rally to $243.80 or the parallel retrace at $274.94 may be a selling opportunity rather than a recovery.

Software Slaughter: Catching Falling Knives

The selling pressure wasn't limited to legacy tech; high-flying software names also took a beating, creating extreme volatility and potential opportunity for nimble traders.

CrowdStrike (CRWD) plummeted 9.85%, breaking a solid level of support at $355.54. The volatility here is staggering—a massive swing from the highs of $431 just days ago down to lows of $342.

Drew used this move to illustrate a vital lesson in swing trading:

"Look how price broke this parallel channel. Look at where it went, went right to where the resistance at $384.67 pierced that area… and it got a bounce right back up to the bottom end of that parallel channel."

When a stock breaks a major trendline or parallel channel, it often snaps back to test the breakdown point. This "retest" is often the most prudent exit point for traders who were caught in the move, or a short-entry point for bears. CrowdStrike is currently oversold, and a bounce back to test $355.54 or even $384.67 is statistically probable. However, if the selling persists, a "three-bar surge" could drag the stock down to $328.65.

AppLovin (APP) also dropped over 9%, putting its trendline from the February 5th pivot in jeopardy. The technicals here are precarious. If the support at $317.15 fails, the air pocket below is significant. The next major support isn't until $300, and a breakdown there could open the door to a retest of the April 2025 lows near $200. While divergence on the RSI suggests some internal strength, the trend is currently the enemy of the bulls.

The Financial Sector: AI Fears and Credit Crunches

American Express (AXP) found itself in the crosshairs of two negative narratives: the tariff escalation and the liquidation of $1.4 billion in private credit funds by Blue Owl Capital. The stock fell 7.2%, plunging through support at $323.67.

The sell-off in AXP reflects a deeper fear regarding the "white-collar" economy. As AI disruption threatens programming and administrative roles—the very demographic that utilizes premium credit card services—investors are repricing the risk for financial institutions reliant on this customer base.

Technically, AXP has triggered a Head and Shoulders pattern by breaking its neckline. This bearish formation projects a measured move down to $295.34. While the stock found temporary support near the October 2025 lows, the combination of a confirmed bearish pattern and fundamental headwinds suggests that rallies back to the $350 trendline should be viewed with skepticism.

Crypto and Commodities: Diverging Paths

Bitcoin and Oil, two assets often viewed as alternatives to traditional equity exposure, showed diverging behaviors today.

Bitcoin suffered a sharp 4.59% decline, breaking below recent pivot points and putting the bullish consolidation thesis in jeopardy. While a bounce is still anticipated, the failure to hold the upper range of the recent green candle dampens the immediate upside potential. The $75,000 and $84,000 targets remain overhead, but the bears are gaining control. Support at $59,075 is the key level to watch; a failure there could signal a deeper crypto winter.

US Oil, conversely, remained resilient, closing slightly positive. Geopolitical tensions act as a floor for oil prices. As long as uncertainty reigns, oil is likely to push toward $70 and potentially test resistance at $71.70. This divergence between Bitcoin (risk-on asset) and Oil (geopolitical hedge) further highlights the defensive posture of the current market.

Conclusion: Discipline in the Face of Uncertainty

The market action of February 23, 2026, serves as a stark reminder that certainty is a luxury in trading. With the S&P 500 testing critical trendlines, AI disrupting established business models, and geopolitical tensions rising, the "easy money" phase of the market appears to be pausing.

For traders, this environment demands precision. It is not enough to simply buy the dip blindly. We must identify specific support levels—like $260.43 on the IWM or $300 on APP—and wait for confirmation before committing capital.

As Drew Drosek emphasized regarding the discipline of taking profits: "Hit that sell button, take the profits. You never go broke taking a profit… You hang around too long and then, oh my gosh, now you're in a world of pain."

In the days ahead, watching the 6,800 level on the S&P 500 and the $90.39 level on Silver will be paramount. These levels will likely dictate whether we are in a temporary pullback or the beginning of a structural shift in market direction. Stay nimble, respect the technicals, and keep your risk management tight.