Flat Indexes, Weak Semiconductors: The Market’s Real Signal Into the Fed

The major indexes finished with little visible damage, but the close understated the weakness developing beneath the surface. Semiconductor selling intensified, several bullish chart structures failed, and investors appeared to reduce risk ahead of a dense stretch of mega-cap earnings and the Federal Open Market Committee decision. In the latest Trading the Close Market Recap, Pro Trader Drew Dosek focused less on the flat headline close and more on what the market’s internal structure was signaling underneath it.

The Macro Backdrop: Earnings, the Fed, and Geopolitics

This week brings earnings from several major technology companies, including Apple, Microsoft, Meta, Robinhood, and Arm. At the same time, renewed geopolitical tension in the Middle East continues to influence commodity prices and investor risk appetite. Those catalysts are arriving into a market that was already showing signs of hesitation, making position management more important than predicting the next headline.

The central event is Wednesday afternoon’s FOMC decision. The market remains focused not only on whether rates change at this meeting, but also on how officials frame the path into September. With no scheduled meeting in August, a pause now would shift more attention toward the next decision and the data released between meetings.

That uncertainty helps explain the muted action in the major indexes. Investors do not need to become outright bearish to reduce exposure before a binary event. As Drew explained, trimming positions ahead of major announcements can be a rational way to manage the risk of a sharper selloff if the market reacts poorly.

“It makes sense for investors to trim a little bit of their positions going into these big announcements coming up just to protect themselves in case we do see harder selling pressure.”

The S&P 500 and Nasdaq: Weakness Beneath the Close

The S&P 500 ended the session close to flat, but the intraday action was less constructive than the final number suggested. Sellers controlled much of the day before a late rally prevented the index from closing near the bottom of its range. That recovery softened the appearance of the session without resolving the resistance sitting overhead.

Price has now spent three consecutive sessions closing in a narrow range beneath a declining trend line. That type of compression below resistance can signal distribution when buyers repeatedly fail to produce a clean breakout. The next important support sits near 733.28 on the rising trend line that helped stabilize the prior two declines.

The Nasdaq, tracked through QQQ, is already showing more visible technical damage. After closing below its key trend line late last week, the ETF extended the breakdown during Monday’s session. The former support now becomes resistance near $695.64, while $674.90 remains the next meaningful downside level.

That divergence is important. The broader market has not broken decisively, but technology leadership is weakening ahead of the week’s largest catalysts. Until QQQ reclaims broken resistance or semiconductor selling stabilizes, the flat index close should not be mistaken for healthy internal structure.

Semiconductors Are the Market’s Main Pressure Point

The most important development into the close was the continued weakness in semiconductors. SMH fell 2.25% and tested the upper boundary of a rising parallel channel that has guided price since the April 2025 lows. Because chips remain one of the market’s most influential leadership groups, continued weakness in the sector has the potential to spread into the broader indexes.

Drew framed semiconductors as the group to watch for confirmation that the selling is becoming more systemic.

“Pay attention to the semis. That likely is going to start spilling out and bleeding over to the rest of the markets if the semis continue to remain under pressure.”

A deeper decline in SMH would bring the median line of the older parallel channel into focus near $508.20. On the upside, any relief rally would first need to work through resistance near the previous head and shoulders neckline at $578.24.

The fundamental pressure came from growing competition in the memory-chip industry. China’s CXMT entered the public market with a sharp initial surge, drawing attention to the threat of new supply in a business where AI-related demand has supported unusually strong margins. The market’s concern is not simply that another company entered the space. It is that additional production capacity could begin pressuring the margins currently supporting U.S. memory names.

As Drew put it:

“If you’re making 80-plus-percent margins, who doesn’t want a piece of that pie?”

That concern weighed on SanDisk and Micron before spreading into the broader chip complex. Nvidia fell nearly 5% and broke below the lows of a failed bullish consolidation. Failed breakouts matter because traders who entered on the initial move are often forced to exit once price reverses back through the pattern.

“What happens whenever you have a failed move on a chart, you have some of the biggest moves in the opposite direction,” Drew explained.

Nvidia’s break below its July 17 low puts the lower boundary of its parallel channel near $191.88 in play. Beneath that, the next major structural support sits near $179.74. AMD also confirmed a break from its own rising channel, leaving resistance near $544.23 and bringing lower support near $447.37 into focus.

Commodities: Risk Premiums Come Out of the Market

Commodity markets reflected the same broader theme of rapid repricing around uncertain catalysts. U.S. oil fell 9.52% as part of the geopolitical premium embedded in the recent advance came out of the market. Price is now approaching a support zone between $81.33 and $80.00.

Any renewed escalation in the Middle East could quickly restore part of that premium, but the technical map remains clear. Near-term resistance sits at $87.07, while the longer-term rising trend line projects closer to $96.44 if oil eventually resumes its advance.

Gold remains trapped below a declining trend line and still needs additional consolidation before a sustainable breakout develops. Resistance sits near $4,096, while downside support remains near $3,886.

Silver is showing stronger relative structure. Price broke above its declining trend line, retested the breakout area, and continued higher. The next resistance sits near $63.26, although the larger chart still leaves open the possibility of a retracement toward the longer-term trend line near $49.71.

Natural gas offered a reminder that an attempted breakout is not the same as a confirmed one. After consolidating near the top of its range and briefly pressing above trend line resistance, price failed to hold the move and slipped back to support near $2.75.

A loss of that level would bring the April low near $2.53 into view. To improve the technical structure, buyers need to push natural gas back above $2.90 and hold it there.

Bitcoin remained comparatively quiet over the weekend and continues to trade within a defined technical range. Daily closes above $64,536 are needed to preserve the current parallel channel, while the high pivot near $67,264 remains the next major resistance.

Software Strength Creates an Important Divergence

While semiconductors weakened, capital rotated into several software names. That relative strength does not erase the deterioration in chips, but it shows that investors are still willing to buy selective areas rather than abandon technology broadly.

Oracle gained 4.27% and closed above support near $118.86. The stock is attempting to build a base after a prolonged decline, with broken trend line resistance near $143.00 serving as the next major upside reference. If the current base gives way, support near $103.82 becomes more important.

Atlassian rose roughly 10% and pushed back toward the midpoint of its declining parallel channel. Repeated tests of that area suggest buyers are applying more pressure, with resistance near $120.09 ahead of the company’s August 6 earnings report.

Workday followed with a 9% advance and returned to the upper portion of its prior consolidation range. The recent sequence of higher lows supports a continued push toward $158.66 and potentially $173.58, provided the rising support near $135.03 remains intact into its August 20 earnings report.

The software rally is useful as a measure of rotation, but it is not yet enough to offset the weakness in semiconductors. The more important question is whether that strength broadens or remains concentrated in a small group of names.

Viewer Requests: Support Tests and Breakdown Risk

Lumentum was rejected from a declining trend line and returned to the lower boundary of its parallel channel. This is now the fourth test of the same support area, and repeated tests tend to weaken a level because each bounce absorbs additional demand.

Price also tested the area recently on July 17, reducing the time available for buyers to rebuild support. The setup therefore leans toward a breakdown, with the next major level sitting near $616.99.

Iris Energy confirmed a break below its rising trend line, turning the former support into resistance near $39.04. With several resistance levels now stacked above price, the chart continues to favor a move toward lower support near $30.76.

Wolfspeed presented a different type of setup. The stock has fallen sharply into a long-term trend line connecting major lows from September and March, while the daily RSI has moved below 30 and the candle is attempting to form a bottoming tail.

That combination creates the conditions for an oversold countertrend bounce. The first recovery level sits near $29.00, with additional upside toward $33.85 if buyers can generate follow-through from the trend line.

Bottom Line

The market did not suffer a decisive index breakdown into the close, but the leadership group did. Semiconductor weakness, failed bullish structures in Nvidia and AMD, and continued pressure in QQQ showed more deterioration than the flat S&P 500 finish suggested.

The Fed decision and mega-cap earnings now become confirmation events rather than isolated headlines. If semiconductors stabilize and reclaim broken resistance, the broader market can absorb the recent de-risking. If chip weakness continues, the selling is more likely to spread into the indexes and overwhelm the pockets of strength developing in software.

The operator takeaway is straightforward: do not confuse a quiet index close with a quiet market. The more important signal is coming from the sectors that led the advance, and into the Fed, those sectors are losing support.