Trading The Close Market Recap - 11/06/2025: S&P Bull Trap - NVDA & AMD Crack as Data-Blind Fed Sparks Risk-Off

A sharp risk-off sentiment swept through the markets today, as major indices tumbled and high-flying tech stocks faced significant selling pressure. In this afternoon's Trading The Close Market Recap, Pro Trader Drew Dosek of Verified Investing broke down the critical technical breakdowns that have shifted the market’s posture and highlighted the macro-level anxieties fueling the decline. From a government shutdown threatening the flow of economic data to brutal earnings reactions in consumer-facing stocks like CarMax, the landscape has become decidedly more defensive.

Today's analysis dives deeper into the key themes from the show, exploring the implications of a data-blind Federal Reserve, the confirmation of a dangerous bull trap in the S&P 500, and the precarious positions of market leaders now teetering on the edge of major support.

The Macro Headwind: A Data-Blind Fed

One of the most significant overhangs for the market right now is the ongoing government shutdown and its direct impact on the Federal Reserve's ability to make policy decisions. For months, Fed Chair Jerome Powell has consistently reiterated that the central bank's actions are entirely contingent on incoming economic information. This data-driven approach is now being severely hampered.

As Drew explained on the show, this creates a challenging scenario for investors hoping for a more accommodative monetary policy. “It's all data-dependent. Well, if they're not getting data, they're likely not going to cut rates. I think investors are realizing this and hitting the markets pretty hard.” This simple but powerful logic cuts to the core of the market's current anxiety. Without key reports on inflation, employment, and consumer spending, the Fed is essentially flying blind. In such an environment, the path of least resistance is to maintain the status quo, which dashes any near-term hopes for the interest rate cuts the market has been anticipating. This uncertainty is a primary catalyst for the de-risking we are witnessing across asset classes, from equities to cryptocurrencies.

The S&P 500's Confirmed Bull Trap

From a technical perspective, the most crucial development of the day occurred on the S&P 500 chart. The recent push to higher ground, which had many traders feeling optimistic, has now been officially negated. Today’s sharp decline confirmed the price's re-entry into a long-standing parallel channel, a move that re-characterizes the entire breakout as a classic bull trap.

A bull trap occurs when an asset breaks above a key resistance level, luring in buyers who believe a new uptrend is beginning, only for the price to reverse and fall back below that same level. This traps the breakout buyers in losing positions and often leads to accelerated selling as they are forced to liquidate. Today's candle did precisely that, confirming the breakdown and shifting the technical bias firmly to the downside.

Looking ahead, Drew outlined a probable path for the index based on historical price action. “Whenever price breaks a trendline, it often likes to go back up and retest that trendline,” he noted. This suggests a scenario where the S&P 500 could see a short-term bounce to retest the top of the parallel channel before the primary downtrend resumes. Should that pattern play out, the next major downside target is a significant support level at 640.64.

Contagion Across the Indices

The weakness seen in the S&P 500 was not an isolated event; it was a theme echoed across all major U.S. indices, signaling broad-based selling pressure.

• Nasdaq 100 (QQQ): The tech-heavy QQQ saw its key support level at $612.69 decisively taken out. The index closed the day within a gap fill zone around $610.58. If this level fails to hold, the next downside targets are an inclining trendline at $595.01, followed by a more significant support level at $581.64.
• Semiconductors (SMH): The semiconductor sector, a market leader for much of the year, also confirmed a move back inside its parallel channel. This breakdown mirrors the S&P 500's pattern and suggests a potential retest of the channel's top around $365 before a probable decline toward the next support at $341.98.
• Russell 2000 (IWM): The small-cap index has been a leading indicator of weakness, having confirmed its breakdown earlier in the week. Today’s plunge reinforced that bearish stance, with the next support zone located at a confluence of a gap fill at $237.79 and a Fibonacci level at $237.33. As Drew cautioned, in a broader corrective move, these initial support levels can often be "blown through," making them areas for a potential pause rather than a definitive bottom.

Earnings Carnage: A Warning from the Consumer

Today’s earnings reports painted a grim picture of the American consumer, who appears to be buckling under the pressure of high interest rates and persistent inflation. Two stocks, in particular, stood out for their catastrophic post-earnings declines.

CarMax (KMX), the largest retailer of used cars in the United States, was absolutely clobbered. The stock's plunge was so severe that it is now trading at price levels not seen since 2012, substantially below its COVID-panic lows. This historic collapse was driven by a trifecta of negative catalysts: declining sales volume as consumers shy away from high financing costs, the uncertainty of a CEO transition, and an ongoing class-action lawsuit. While the immediate picture is bleak, Drew highlighted the long-term psychology of investing. “When I see a big drop like this, I start salivating because I know once that bad news gets out of the way, investors are going to start piling back into stocks extremely beaten up.” For now, key support levels to watch are $29.45 and $25.00 USD.

DoorDash (DASH) provided another data point on consumer health, plummeting 17.45% after missing on earnings per share. The drop pushed the stock outside of a well-respected parallel channel that has contained its price action since July 2024. For DoorDash, tomorrow's session is critical. A close below today’s low of $194.68 USD would confirm the breakdown and imply a further move down to support at $183.15 USD.

High-Flyers on the Edge of a Cliff

The market's former darlings, particularly in the AI and semiconductor space, are now in precarious technical positions. After leading the market higher for months, these stocks are showing signs of significant fatigue and are testing critical support structures.

AMD (AMD) has been a standout performer, rallying from near $170 USD to over $260 USD since October. However, today's sell-off pushed the stock back inside its long-term parallel channel, violating the recent breakout. This is a significant warning sign. A second consecutive close below today's low of $235.74 USD would increase the probability of a much deeper correction, with the next major support levels at $208.46 USD and $194.63 USD.

NVIDIA (NVDA), the undisputed leader of the AI boom, is now on its seventh consecutive day of losses. The stock is rapidly approaching a critical confluence of support. The bottom of its parallel channel, which has guided the stock since the April lows, sits at $184.50 USD. Just below that is a significant horizontal support level at $182.56 USD. This tight zone represents a make-or-break point for NVIDIA. A bounce from here could save the uptrend, but a confirmed break below this area would be a major technical failure. As Drew starkly put it, the stock is “right on the edge of a cliff that could propel the stock down further,” with the next stop potentially being as low as $164.22 USD.

Conclusion: Navigating a Market on Defense

The technical landscape has undergone a dramatic shift. What appeared to be a bullish breakout just days ago has resolved into a confirmed bull trap, driven by macro uncertainty and signs of a weakening consumer. The broad-based selling across all major indices, coupled with breakdowns in former market leaders like AMD and NVIDIA, suggests a defensive posture is now warranted.

The path forward requires careful attention to the key support levels outlined today. While short-term bounces to retest broken trendlines are possible, the primary trend has, for now, shifted lower. For traders and investors, this is a time to prioritize risk management, honor stop-losses, and be prepared for continued volatility. As Drew emphasized when discussing the breakdowns in AMD and NVIDIA, it is crucial to “recognize when they break down and strategize to have a plan.” In a market on its back foot, a clear plan is the most valuable asset a trader can have.