Trading The Close Market Recap - 11/03/2025: Indices Test Multi-Year Trendlines; AI Leaders Show Fatigue

In a market session that felt more like the calm before a storm, investors appeared to be holding their breath ahead of a packed earnings calendar. While the major indices showed mixed results, the real stories were unfolding beneath the surface on the individual charts. In this afternoon's Trading The Close show, Pro Trader Drew Dosek of Verified Investing peeled back the layers of a seemingly quiet day to reveal critical technical patterns, potential cracks in the market's favorite narrative, and a stunningly precise earnings trade that unfolded live after the bell.

Today's analysis goes beyond the headlines, offering a deeper look at the technical inflection points that could dictate the market's next major move. From major indices testing multi-year trend lines to the AI darlings showing signs of exhaustion, the charts are telling a compelling story for those willing to listen.

The Market's Precarious Perch

After a powerful run-up, the major market indices have reached a critical juncture. The SPDR S&P 500 ETF (SPY) is currently undergoing a classic technical test. Having broken out of a massive parallel channel that has contained price action since the COVID lows of 2020, the index is now testing the top of that very channel as support. This "breakout and retest" is a common pattern, but its outcome is far from certain. The indecision was signaled by last week's doji candle at the highs, and the subsequent sideways chop confirms that bulls and bears are in a stalemate.

A successful hold above this channel would signal a new, higher trading range for the market. However, a failure and subsequent close back inside the channel would be a significant bearish development, opening the door for a pullback toward the first major support level around 672.

The tech-heavy Nasdaq 100 (QQQ) finds itself in a similar, albeit slightly more elevated, position. It too is consolidating after a strong move, forming inside bars that represent a coiling of energy. For the bulls, the key support to watch is the top of the large red candle from October 10th. A break below that level would signal that sellers are taking control. The muted action in the broad indices highlights a market waiting for a catalyst, and with a slew of earnings reports on deck, it likely won't have to wait long.

Cracks in the AI Narrative? Amazon and NVIDIA Flash Warning Signs

For over a year, the artificial intelligence narrative has been the primary engine of market gains, with a handful of mega-cap stocks leading the charge. Today, however, we saw potential signs that this powerful theme may be showing signs of fatigue. Amazon (AMZN) provided the most telling evidence. The company announced a major partnership with OpenAI to enhance its Amazon Web Services (AWS) — news that, in previous months, might have sent the stock soaring with no ceiling in sight.

Instead, while Amazon did gap up an impressive 4%, it failed to follow through. The stock sold off from its intraday highs to close with a nasty daily topping tail, right at a long-term trendline resistance dating back to July 2021. As Drew noted on the show, this price action is a significant deviation from the norm. Why didn't the stock continue ripping higher on such fundamentally positive news? The chart suggests that sellers emerged to take profits, a potential signal that the "buy AI at any price" mentality is waning. A failure to reclaim today's high of $258.60 could see the stock pull back to a significant support zone between $238 and $242.

This warning sign on Amazon is amplified by the price action in the AI king itself, NVIDIA (NVDA). The stock has been struggling to make new highs, and a closer look at its near-term parallel channel reveals a subtle but important struggle. For the last four trading sessions, NVIDIA has been fighting with the 50% line of its channel, failing to gain traction above it. Drew highlighted this as a potential sign of investor exhaustion.

"This sort of price action struggling to get above the 50% area is telling me the investors are coming closer to becoming exhausted in the near term for pushing NVIDIA further up on the chart. This is a little bit of a warning sign right here, folks."

When you combine Amazon's weak reaction to good news with NVIDIA's struggle at a key technical level, a cautionary picture emerges. It suggests that profit-taking may be on the horizon for the market's biggest winners.

The Palantir Case Study: Technical Analysis in Action

Just as the closing bell rang, Palantir (PLTR) released its earnings, providing a breathtaking, real-time example of the power of technical analysis. Before the numbers were even public, Drew had identified a key resistance level on the chart: the top of a well-defined parallel channel at $222.

What happened next was a textbook demonstration of how algorithms and informed traders use these levels. As the earnings report hit the wire, Palantir's stock shot up in after-hours trading, running directly to that predetermined level. The price tagged $222 almost to the penny before immediately and aggressively reversing, pulling back over $10 per share within minutes.

"Guys, what an amazing chart. What amazing technical analysis insight gives everybody. Had I not been doing this show, guys, I would have just made a few thousand bucks on that nice short… it's just as simple as drawing a parallel."

This wasn't luck or magic; it was the result of identifying a high-probability zone where sellers were likely to emerge. The parallel channel, drawn from key pivots on the chart, provided a precise roadmap for the stock's price action. This event serves as a powerful reminder that even in the chaotic environment of an earnings release, technical levels are respected. It underscores the value of learning to read the charts, a skill that provides a distinct edge in a market driven by patterns and probabilities.

Sector Divergence: Small Caps and Semis at a Crossroads

While the S&P 500 and Nasdaq tread water, other crucial market sectors are flashing more definitive signals. The iShares Russell 2000 ETF (IWM), which tracks small-cap stocks, is "teasing a breakdown," in Drew's words. The IWM has been supported by an inclining parallel channel since its April lows, but in the last few sessions, it has begun to close outside of this channel. While it staged a remarkable intraday recovery today, forming a long lower wick, the position remains precarious. A confirmed break below that wick would signal a significant shift in trend for a broad swath of the market.

Meanwhile, the VanEck Semiconductor ETF (SMH) is displaying a different kind of bearish price action. After a perfect rejection from a "sleeper hold" resistance trendline last week, the SMH has been consolidating sideways, directly on top of a supporting parallel channel. While this might look like a stable base, experienced technicians recognize this pattern as potentially bearish. When price consolidates on top of support without bouncing, it often implies that it is gathering energy for a move lower. A break of this channel would target the next major support level down at $348.50. The weakness in both small caps and semiconductors suggests fragility beneath the surface of the headline indices.

Bitcoin's Battle at the Channel Bottom

Bitcoin has also arrived at a critical technical juncture. The cryptocurrency is being saved by a long-term parallel channel that has defined its trend, with price currently trading around $107,000 USD after another test of the channel's lower bound. For bulls, the good news is that this support has held once again.

However, the bad news is the frequency of these tests. As Drew pointed out, Bitcoin has now tested the bottom of this channel three times in less than a month. In technical analysis, the more times a support level is tested in a short period, the weaker it tends to become, as the pool of buyers at that level gets depleted. This price action suggests that sellers are becoming more aggressive. If this support finally gives way, the first stop would be a trendline near $105,000 USD, with a more significant support zone waiting in the $97,000 to $98,000 USD range.

A Lesson in Low-Risk Entries: The Roblox Breakdown

For traders looking for actionable setups, the analysis of Roblox (RBLX) provided a masterclass in disciplined trading. The stock has confirmed a breakdown from a large wedge pattern that had been forming since July. This is a bearish development, but the key lesson is not to chase the move lower. Instead, Drew outlined a patient, high-probability strategy for a potential short trade.

"Wait for a retrace. Wait for price to come back up closer to this trend line. Then short ROBLOX. And if price gets above this trend line and confirms, well, then stop out. It's that simple."

This approach defines the entry, the target, and the stop-loss before the trade is ever placed. By waiting for price to retest the breakdown level (around $127.43), a trader can enter a short position with a clearly defined and relatively small amount of risk (stopping out on a close back above the trendline). The potential reward is significant, with downside targets at $100.35 and then $88.49. This methodology of waiting for a low-risk entry, rather than reacting emotionally to a breakdown, is a hallmark of professional trading.

Conclusion: A Market of Messages

Today's session was a powerful reminder that even on a "muted" day, the market is constantly sending messages through the charts. We are at a pivotal moment where the major indices are testing the boundaries of multi-year trends. At the same time, the market's dominant AI theme is showing its first real signs of exhaustion, a development that could have broad implications.

The stunningly accurate Palantir trade serves as undeniable proof that technical analysis provides a clear and actionable edge, turning the chaos of earnings into an opportunity defined by probability. As we move deeper into earnings season, the lessons from today are clear: listen to the charts, watch for divergences between sectors, and trade with a disciplined plan. The patterns are forming, and for those prepared to act on them, the opportunities are abundant.