Trading The Close Market Recap - 10/09/2025: Markets at Key Resistance — S&P, Nvidia & AI Names Show Pullback Risk

In today's fast-paced market, a single day can feel like a week. After a strong push higher yesterday, the market did an about-face, giving back gains and leaving traders to navigate a sea of chop and indecision. This price action is unfolding at a critical juncture: the very top of long-term technical patterns. In this afternoon's Trading The Close show, Pro Trader Drew Dosek of Verified Investing broke down the mounting evidence that suggests the market may be due for a pause or pullback, particularly as the dominant AI narrative begins to face questions about its long-term profitability.

This article delves deeper into the key technical signals flashing across the indices, the specific stocks showing signs of exhaustion, and the overarching theme that now, more than ever, is a time for caution and careful analysis.

The S&P 500 at a Generational Crossroads

The S&P 500 is currently testing a level of immense technical significance. As Drew highlighted on the show, the index is pressed against the top of a massive parallel channel that originates from the COVID lows in 2020. For years, this channel has masterfully defined the market's trajectory, with price action respecting its upper and lower boundaries with remarkable precision. Now, we find ourselves at the very peak of this structure, a natural point for the market to either consolidate for a powerful breakout or reverse course.

Adding to the drama is today's candlestick pattern: a doji. In the language of technical analysis, a doji candle signifies a stalemate between buyers and sellers, representing pure indecision. When a doji appears after a strong uptrend and at a major resistance level, it often acts as an early warning sign of a potential trend change. The bulls have lost their upward momentum, and the bears have fought them to a draw.

This indecision was palpable in the day's price action. The market sold off early, only to stage a rally in the final hour of trading. However, this late-day buying pressure came on light volume, a detail that experienced traders do not ignore. As Drew noted, "whenever it's light volume and light volume transpires in the second half of the day, I raise a question with that because that tells me that there's not a lot of institutions… that are chasing this momentum." This suggests the rally may have been driven by smaller players or short-covering rather than conviction from large institutions, which are often the ones selling into strength at the start of the day. With the market so extended after a significant run-up, the path of least resistance may be shifting. As Drew succinctly put it, "the probabilities dictate more of a pullback than to gain momentum to go higher."

Is the AI Narrative Showing Cracks?

The market's incredible rally in 2025 has been largely fueled by a single, powerful story: the Artificial Intelligence revolution. However, recent price action in key AI-related stocks suggests that investors may be starting to ask tougher questions. As Drew observed, "this AI-driven narrative is starting to have question marks as far as profitability goes and will this linger will this then put a dent or poke a hole in that AI bubble that everyone's been talking about."

Two charts from today's session serve as perfect case studies:

Dell (DELL): Just yesterday, Dell surged higher after the company increased its long-term revenue forecast, citing demand for its AI-driven hardware. Today, that enthusiasm evaporated. The stock was aggressively sold, forming a "nasty candle" that erased a significant portion of the prior day's gains. This sharp rejection occurred right at the 50% median line of a long-term parallel channel, a technical level that has repeatedly served as resistance in the past. Such a swift and brutal reversal on the heels of good news is a red flag, indicating that sellers overwhelmed the AI-fueled buying pressure.

NVIDIA (NVDA): As the undisputed leader of the AI chip space, Nvidia's chart is one of the most closely watched in the world. Today, despite closing up 1.83%, the stock formed a perfect doji candle, mirroring the indecision seen in the broader S&P 500. This doji appeared as Nvidia pierced the top of its own long-term parallel channel, a resistance level sitting at $193.34. The pattern is a classic signal of exhaustion. After a relentless climb, the buying momentum has stalled at a critical technical barrier. Drew’s analysis was clear: "I see this sort of pattern present itself on the charts, the probabilities are telling me we're coming down on Nvidia even with all this AI narrative driving momentum in the markets."

These signals in bellwether AI names don't necessarily mean the AI revolution is over. However, they do suggest that the initial, euphoric phase of "buy everything AI" may be giving way to a more discerning, profit-focused market.

Reading the Tea Leaves in the Indices

While the S&P 500 and Nasdaq are testing their upper limits, other major indices are telling a slightly different, and potentially more bearish, story. This divergence provides crucial clues about the market's underlying health.

The Dow Jones Industrial Average, for instance, is exhibiting a classic technical breakdown pattern. As Drew demonstrated, the Dow recently broke below a critical trendline drawn from the April lows. In a textbook move, the price then rallied back up to retest the underside of this broken trendline, failed, and is now being rejected. This "break and retest" is a high-probability signal that the prior uptrend has been violated and that further downside pressure is likely to commence.

Meanwhile, the semiconductor sector, often a leading indicator for the broader market, is also flashing a warning. The VanEck Semiconductor ETF (SMH) still has a prominent daily "topping tail" from Tuesday's session intact. A topping tail is a candle with a long upper wick, showing that buyers pushed the price significantly higher during the day, only for sellers to step in and force the price to close near its opening level. It’s a sign of a failed rally and a victory for the bears at those higher prices. The fact that the semis have not been able to overcome this signal is a significant tell.

The Unmistakable Power of the Topping Tail

Technical analysis is the art of identifying recurring patterns in price action that signal a higher probability of a specific outcome. Among the most powerful of these signals is the topping tail, especially when it appears after a long advance and into a major resistance level.

Alibaba (BABA) provides a perfect example. The stock rallied strongly from its September lows, running directly into a multi-year inclining trendline. Right at that point of contact, it printed a massive topping tail. This was a clear message from the market. As Drew explained, "…that's a major signal it's a technical signal everybody needs to know on the charts when you start having topping tails… at the highs they're the most powerful implying that there's a lot of sellers up here that we're meeting those bulls and pushing price right back down." True to form, Baba has sold off since that signal, proving the predictive power of the pattern.

We saw a similar story play out in Silver today. After an impressive run, Silver pushed to new highs of $51.23 USD, only to reverse and form its own topping tail. This occurred while the Relative Strength Index (RSI), a momentum indicator, was deeply in overbought territory at 79. This combination of a bearish candle pattern at new highs with an overbought momentum reading is a high-probability setup for a pullback.

Profit-Taking Hits Commodities

The theme of exhaustion and profit-taking wasn't confined to equities. After a spectacular run, Gold was decisively rejected from the psychological $4,000 USD per ounce level. The precious metal printed a bearish reversal candle and, importantly, closed below a key inclining trendline that had previously guided its ascent. This technical breakdown, combined with an extended "time count" on the chart, suggests Gold is due for a correction. Drew identified potential support levels on the way down at $3,877 USD and $3,770 USD, with a more attractive "solid level of support" for potential buyers much lower, around the $3,500 USD mark.

Bitcoin also paused its historic run. After making brand new all-time highs, the cryptocurrency has pulled back. While the longer-term measured move target of $127,459 USD remains on the table, it is contingent on price holding critical support levels. Today, Bitcoin successfully tested parallel support around $119,553 USD. The key line in the sand, however, is the "neckline" at $117,416 USD. A close below that level would invalidate the immediate bullish setup and open the door for a deeper correction.

Conclusion: A Time for Caution, Not Panic

The evidence is mounting across asset classes. From the indecisive doji on the S&P 500 at the top of its multi-year channel to the topping tails in key commodities and the reversals in bellwether AI stocks, the market is sending a coordinated message of exhaustion. These are the kinds of signals that precede pullbacks.

This doesn't mean the bull market is over or that a crash is imminent. As Drew often reminds viewers, corrections are a healthy and normal part of any market cycle. "We're due for a correction in the markets whether it's five or ten percent doesn't mean the end of the road," he stated. It simply means that after a long and powerful advance, investors are beginning to take profits at logical technical and psychological levels.

For the disciplined trader, this is not a time for fear, but for heightened awareness and strategy. It's a time to review positions, tighten stop-losses, and resist the urge to chase extended moves. The highest probability trades in this environment may be on the short side or, for those with patience, waiting for the inevitable pullback to present better buying opportunities at key support levels. The market has given us a clear warning; now it's up to us to listen.