Trading The Close Market Recap - 11/05/2025: Parallel Channel Rejections, Whipsaw Volatility & Earnings Carnage

In this afternoon's Trading The Close show, Pro Trader Drew Dosek of Verified Investing guided viewers through a market that saw selling pressure take a much-needed pause. While earnings reports sent individual stocks like Pinterest and SMCI tumbling, the broader indices staged a notable bounce. This relief rally was not a surprise to some; as Drew noted, the proprietary Gann Cycle Report had anticipated a potential move up or sideways action, showcasing the power of cyclical analysis.

Today’s article will delve deeper into the critical technical structures currently guiding the market, explore the psychologically taxing "whippy" price action traders are facing, and break down the high-probability setups emerging from the earnings season chaos.

The Unseen Hand of Parallel Channels

One of the most powerful and recurring themes in today's market analysis is the influence of long-term parallel channels. These simple technical structures, formed by two parallel trendlines, are acting as undeniable guides for price action across major indices, influencing everything from daily closes to intraday momentum.

The S&P 500 provided a textbook example. Despite a positive green day, the index pushed directly into the top of its guiding parallel channel and was promptly rejected. This channel remains the dominant force, containing the market's energy. A decisive close below yesterday's low of 674.58 on the SPY would signal a move lower toward the gap fill at 671.86. Conversely, a confirmed break above the channel would open the door to the next major resistance, a gap fill at 683.33.

The semiconductor sector, via the SMH, offered an even more granular look at this phenomenon. After breaking down yesterday, the SMH rallied today to perfectly test the underside of its own parallel channel before selling off. As Drew demonstrated on a 10-minute chart, the rejection was immediate and precise. "It's fascinating how technical analysis does work on the charts," he noted. This is a crucial lesson for traders: a technical level established on a daily or weekly chart, dating back months, can trigger an immediate reversal on an intraday timeframe.

The Russell 2000 (IWM) tells the other side of the story. After breaking down from its long-term parallel channel, it staged the bounce Drew anticipated yesterday. Now, the most probable path is a retest of that broken channel from below, around the 247.89 level. This is a classic technical setup where former support becomes new resistance, often creating a high-probability area for traders to initiate short positions.

Navigating a "Whippy" and Psychologically Taxing Market

If recent market action has felt erratic and difficult to trade, you are not alone. Drew described the environment as "very tricky," characterized by sharp, often contradictory moves designed to frustrate and confuse market participants. Bitcoin’s recent price action serves as a perfect case study in this market personality.

Yesterday, Bitcoin plunged through a key declining trendline, a move that likely triggered stop-loss orders and convinced many that a collapse was imminent. Today, it staged a violent rally right back to "kiss" the very trendline it had just broken. This type of price action is known as a whipsaw or a shakeout.

"The markets love to whip people out," Drew explained. "They like to whip weak hands out, stretch you to your limits, thinking Bitcoin's going to collapse and then it just runs right back up to the trend line that it just broke yesterday."

This is a market designed to test a trader's conviction and emotional discipline. It punishes those who chase breakdowns and rewards those who wait for confirmation. For Bitcoin, the chart is clear despite the volatility. It is not "out of the woods." The bulls need to reclaim the trendline at $104,629 USD and ultimately get back inside the larger parallel channel, with resistance at $107,365 USD. Failure to do so leaves the door open for a retest of support at $97,662 USD.

Bearish Consolidation Builds in Commodities

While equities bounced, the commodity complex is painting a picture of potential weakness. Gold, silver, and oil are all exhibiting patterns of bearish consolidation, a technical formation that traders must learn to recognize.

Bearish consolidation occurs after a significant price drop. Instead of bouncing sharply, the asset enters a period of tight, sideways trading. This is not a sign of strength or base-building; rather, it's often a pause where the market gathers energy for the next move lower.

Gold is hovering just above a critical support level at $3,918.52 USD. The longer it consolidates in this tight range, the more momentum builds for a potential breakdown. If that support gives way, the next major target is $3,754 USD.

Silver’s chart is even more telling. It is also consolidating on support, but this consolidation is happening entirely within the lower portion of a massive red candle from its recent plunge. This implies that sellers remain in firm control, and more downside is likely. The next technical stops on the chart are $44.26 USD and then $41.26 USD.

US Oil has already begun the next leg down. After a period of consolidation, it closed decisively below the recent support wicks. This break opens the door for a move down to the next support level at $58.49 USD, with a deeper target at the most recent pivot low of $55.99 USD.

The Earnings Gauntlet: Finding Opportunity in the Carnage

Earnings season always brings volatility, and this week is no exception. While many traders view earnings as a "coin flip," the aftermath of a big report can create some of the clearest and most profitable trade setups if you know what to look for.

Pinterest (PINS) is a prime example. The stock was punished, falling over 20% after missing on earnings per share. While the immediate reaction was brutal, a look at the weekly chart reveals a compelling opportunity. The stock is now approaching a massive, long-term trendline that originates from the COVID lows in 2020. This is not just any trendline; it is a major structural support level. A 20% haircut into such a significant level of support makes a bounce highly probable. A rally from the current ~$25 USD level could potentially carry the stock back toward the $30 USD range, offering a significant return.

Super Micro Computer (SMCI) also plummeted, closing down over 11% after confirming a previously announced earnings miss. The drop caused the stock to slice through a key inclining trendline. This breakdown creates a classic swing trade setup. Often, after a trendline breaks, price will continue to fall to the next support zone (in this case, between $38.40 USD and $40 USD) before staging a relief rally to retest the broken trendline from below. A trader could potentially enter near support and ride a bounce back to the trendline, currently around $43 USD, for a quick gain of over 10%.

Reading the Tea Leaves: Pre-Earnings Technicals

Analyzing a chart before an earnings report can provide critical clues about potential reactions. Two stocks reporting soon, SanDisk (SNDK) and Take-Two Interactive (TTWO), offer valuable lessons in pre-earnings analysis.

SNDK is in a powerful, sharp uptrend. The trend is so steep that Drew shifted to the hourly chart to gain clarity, revealing a clean parallel channel. The stock is currently consolidating right under the 50% line of this channel, a key resistance level. This consolidation suggests it could make one more push to the top of the channel around $235.23 USD. However, should earnings disappoint, a 20% drop like Pinterest's would send the stock down toward the $172 USD area, which conveniently aligns with a gap fill at $175.49 USD, creating a clear downside target.

Take-Two Interactive (TTWO), a viewer submission, presents a more nuanced picture. On the weekly chart, the stock is in a long-term parallel channel. It managed to get above the 50% median line but has failed to accelerate higher. Instead, it is engaged in weak, tight consolidation right on top of the line. This type of price action is often a warning sign. Strong moves confirm a breakout with an accelerated push, followed by a retest. TTWO’s weak hovering suggests it is more likely to break back down, with an initial target at the lower trendline around $237.73 USD. While the long-term story is bullish with a new Grand Theft Auto game on the horizon, the near-term technicals are flashing caution ahead of earnings.

Conclusion: A Market of Precision and Patience

Today’s market action underscores a critical truth: even in a volatile and tricky environment, technical analysis provides a clear and actionable roadmap. The market’s bounce was a welcome relief for the bulls, but major indices are now pressed against the formidable resistance of their long-term parallel channels. The rejections seen today in the S&P 500 and SMH serve as a potent reminder that these levels must be respected until they are decisively broken.

From the whipsaw action in Bitcoin to the bearish consolidation in commodities and the dramatic post-earnings moves, the market is demanding discipline and patience. The most compelling opportunities are not found by chasing headlines but by identifying where extreme price moves intersect with major, long-term technical levels. Whether it's a 20% drop into a multi-year trendline or a breakdown and retest of a parallel channel, these are the setups that provide traders with a definable edge. By focusing on these high-probability scenarios and understanding the market's current psychological games, traders can navigate the remainder of earnings season with confidence and clarity.