Trading The Close Market Recap - 11/10/2025: 50-Day SMA Bounce Sparks Tech Rally as Small Caps Lag

On a day when headlines celebrated the potential end of the government shutdown, the real story for traders was written on the charts. A powerful rally swept through the major indices, but as Pro Trader Drew Dosek detailed in this afternoon’s Trading The Close show, this move was less about Washington politics and more about a critical technical test that has set the stage for the market’s next major move. While the news provided the narrative, a key moving average provided the floor, triggering a ferocious bounce that has many wondering if the dip is over.

The 50-Day Moving Average: The Market's Technical Lifeline

After a sharp 4% drop, the S&P 500 found its footing on Friday, leading to a massive two-day recovery that has already clawed back 3% of those losses. The catalyst wasn't a headline, but a precise tag of a key technical indicator: the 50-day simple moving average (SMA). This wasn't just any touch of the 50 SMA; it was the first time the index has tested this level since it established a clear uptrend back in the spring.

As Drew pointed out, the significance of this event cannot be overstated. "As a matter of fact, on this whole rally up since the April lows, once price got established above the 50 moving average, we haven't touched it except for on Friday." In technical analysis, the 50 SMA is widely watched by institutional traders as a key demarcation line for the medium-term trend. A break below it can signal a shift in market character, while a strong defense of it, as we just witnessed, reaffirms the bulls' control.

What made this bounce particularly noteworthy was its velocity. The market's behavior has been inverted recently. Typically, markets take the stairs up and the elevator down. This time, we saw the elevator go straight back up. This explosive price action suggests a high degree of pent-up demand at that key technical level. The next major hurdle for the S&P 500 is the gap fill resistance at 683.34 (on the SPY), a level that will determine if this powerful bounce has the legs to continue higher.

A Tech-Led Stampede into Resistance

The force of today’s rally was most evident in the technology sector. The Nasdaq 100 (QQQ) outpaced the S&P 500, rocketing 4% from its recent lows. This tech-led charge has brought the index directly back to a zone of consolidation pivots from early November, which now serves as the first line of resistance. Above that, the next major target is the gap fill at 632.

This strength was mirrored in the semiconductor space, represented by the SMH ETF. After a brief dip below a long-term parallel channel created a potential bull trap, the SMH found support precisely at the 50% median line of that channel. This level was reinforced by a significant area of prior price consolidation, a textbook example of old resistance becoming new support. The bounce from this confluence zone was aggressive, signaling that dip-buyers were eagerly waiting.

Nowhere was this animal spirit more apparent than in NVIDIA. The stock experienced a dramatic reversal on Friday, piercing its key inclining parallel channel only to be bought up aggressively into the close. That momentum carried through today with a gap up, pushing the stock back toward the $200 USD mark. This rapid recovery has set up a critical test of resistance between the gap fill at $206.88 USD and the 50% median line of its channel at $208.47 USD. The market’s reaction in this zone will be a major tell for the health of the entire tech sector.

Small Caps Tell a Different Story

While large-cap tech names were soaring, the small-cap Russell 2000 (IWM) painted a much more cautious picture. Unlike the S&P 500, which defended its key trend support, the IWM has already confirmed a breakdown from its own inclining parallel channel that dates back to the April lows.

After breaking down, the IWM is now rallying back up to retest the underside of this broken trendline, a classic technical pattern where prior support is tested as new resistance. This creates a critical "fork in the road" for small caps right around the $250 level. A rejection here would signal persistent weakness in the more speculative, domestically-focused part of the market and could lead to a retest of support at $237.33. This divergence between the strength in mega-cap tech and the underlying weakness in small caps is a dynamic that warrants close attention, as it often precedes broader market shifts.

Bitcoin and Precious Metals: Seeking Confirmation

Away from equities, other asset classes are also at key inflection points. Bitcoin, after a series of sharp downward moves, is attempting to stabilize. However, it remains firmly within a bearish structure. As Drew cautioned, "we're not out of the woods yet." The cryptocurrency faces a wall of resistance, starting with its inclining parallel channel around $107,000. Even if it overcomes that, the top of a massive red candle from November 3rd looms as major resistance at $110,000. Until Bitcoin can decisively clear these levels, any rally should be viewed with skepticism.

In the precious metals complex, both gold and silver staged impressive rallies today. Gold is attempting to break out of a bearish consolidation pattern, and importantly, has reclaimed a key inclining trendline. For this move to be validated, bulls need to see a close above today’s high of $4,115 USD. Such a close would help solidify the trendline as support and could springboard a move toward the next resistance at $4,251 USD.

Interestingly, silver is showing more relative strength than gold. It has already pushed deeper into its overhead resistance zone between $50.50 USD and $52.00 USD. This area, defined by the lower pivots of its previous consolidation, will be a tough battleground. However, silver’s outperformance suggests a more risk-on appetite within the metals space, a positive sign for bulls.

Energy Markets Coiling Up

The energy sector is displaying classic bullish consolidation patterns. U.S. Oil, after a sharp move up, has been flagging sideways at a gentle 45-degree angle. This type of price action is constructive and suggests that energy is building for its next leg higher. The key line in the sand is the trendline resistance at $61.44 USD. A clean break above that level would confirm the bullish pattern and open the door for a move toward the major declining trendline at $65.43 USD.

Natural Gas has been surprisingly strong, pushing against resistance despite being in a near-term overbought state. It has now closed above a key resistance level for two of the past three trading sessions, but it has yet to confirm the breakout with a move above the prior day's high. While the momentum could carry it to the $4.70 target, Drew noted that a pullback toward support at $4.08 would be a healthier and more sustainable setup before resuming its upward trajectory.

The Danger of Chasing Parabolic Moves

Today's session provided powerful lessons on both sides of momentum. While NVIDIA showed the power of a reversal, Lumentum Holdings (LITE) served as a stark reminder of what happens when a move goes too far, too fast. Following its earnings report on November 4th, LITE exploded higher, gaining an incredible 45% in just four trading days.

However, the chart is now flashing warning signs. Both Thursday and today produced "topping tails," long upper wicks on the candles that indicate sellers are stepping in to take profits at higher prices. As Drew explained, "what goes up must come down… 45% in four days. There's going to be profit-takers, especially when we're talking about multiple topping tails on the chart." This accelerated, parabolic move is unsustainable, and a pullback toward its long-term inclining trendline near $210 USD is highly probable.

Similarly, Google’s powerful 4% rally today has brought it directly into a major confluence of resistance. It is now testing the high of a massive red distribution candle from October 30th at $291 USD, as well as the top of its parallel channel just above at $295.69. This is precisely the area where traders who failed to sell during the last peak will be looking to exit their positions.

Conclusion: A Technical Bounce Meets a Wall of Resistance

Today's market action was a masterclass in technical analysis. While the news cycle provided a convenient narrative, the bounce from the 50-day moving average on the S&P 500 was a purely technical event that reaffirmed the medium-term uptrend. The subsequent rally, led by mega-cap tech, has been powerful and swift.

However, this rally has not occurred in a vacuum. Key leaders like NVIDIA and Google are now approaching significant overhead resistance levels, just as the broader S&P 500 targets its own gap fill resistance. The simultaneous weakness in small caps suggests that participation in this rally is narrow. The question now is whether the technical fuel from the 50 SMA bounce is enough to power through this wall of resistance, or if this is simply a sharp relief rally destined to fail. The charts have provided the key levels; now it is up to traders to watch how price reacts at these critical junctures.