Trading The Close Market Recap - 12/09/2025: Fed Watch — Rising Yields, Transports Breakout, Silver Surge & Nat Gas Crash

As the market braces for a pivotal FOMC announcement, today’s session was marked by powerful, divergent moves across asset classes. While some sectors showed signs of bullish continuation, others experienced dramatic collapses, creating a complex and opportunity-rich environment for disciplined traders. In this afternoon's Trading The Close, Pro Trader Drew Dosek of Verified Investing dissected these critical cross-currents, from a "rocket ship" move in silver to the brutal collapse in natural gas, providing a technical roadmap for navigating the days ahead.

The Yield Curve's Curious Message

With the Federal Reserve's interest rate decision on the horizon, one might expect bond yields to reflect a dovish sentiment. However, the 10-year Treasury yield is telling a different story. It's pushing higher, carving out a classic inverse head and shoulders pattern on the chart—a technical formation that typically signals a reversal from a downtrend to an uptrend. This pattern has a measured move target that points all the way up to 4.392%.

So, what's driving this seemingly counterintuitive move? As Drew explained, the market is looking beyond tomorrow's announcement and into 2026. "Currently the Fed watch tool is only pricing in two cuts of 25 basis points for 2026." This muted expectation for future rate cuts, combined with rising inflation concerns due to tariffs and uncertainty surrounding Fed Chair Jerome Powell's upcoming retirement, is creating upward pressure on yields. When uncertainty rises, investors demand higher returns for holding government debt, pushing yields up. This dynamic is a critical backdrop for equity markets, as rising yields can create headwinds for stocks, particularly for growth and small-cap companies that rely on debt to finance operations.

Dow Transports Flash a Bullish Economic Signal

While rising yields may suggest caution, another critical corner of the market is flashing a powerfully bullish signal: the Dow Jones Transportation Average (DJT). This index, which tracks airlines, trucking, and rail companies, is often considered a leading indicator of economic health. As Drew noted, "whenever the transports are moving up on the charts, that's likely implying the economy is doing pretty good."

The technical picture for the DJT is compelling. On the weekly timeframe, the index has just achieved a major milestone by breaking above a significant declining trendline that has capped its price since March of this year. This breakout is now being validated by a classic technical pattern: a likely pullback to retest the broken trendline, which would now be expected to act as support.

Even more significant is the larger pattern developing on the chart: a massive inverse head and shoulders formation. This pattern projects a stunning measured move target of 20,505—a potential 20% rally from current levels. If this pattern plays out, it would imply a period of robust economic activity, as it suggests that the companies responsible for moving goods across the country are expected to see a major surge in business. This bullish long-term outlook from the transports provides a fascinating counter-narrative to the concerns being signaled by the bond market.

A Tale of Two Commodities: Silver's Surge and Natural Gas's Collapse

Nowhere was the market's volatility more apparent today than in the commodities space, with silver and natural gas providing a masterclass in divergent price action.

Silver was nothing short of a "rocket ship," blasting higher by 4.5% in a single session. This move was particularly notable because it came from a bull flag pattern near the top of its recent range—a formation that, as Drew has pointed out, often fails. This time, however, it resolved with explosive force. The move is underpinned by powerful fundamentals: record-low global inventories are colliding with high demand from industrial and technology sectors. However, traders should proceed with caution. The Relative Strength Index (RSI) is pushing above 70, signaling overbought conditions. "Generally if they're overbought and stay that way for a time frame, they likely will experience a major air pocket and big collapse," Drew warned. The next major test of resistance lies at $62.23, a long-term trendline connecting pivots from 1980 and 2011.

In stark contrast, natural gas lived up to its notorious nickname: "The Widowmaker." The commodity suffered an incredible collapse, plummeting 18% in just two trading days and slicing through a key support zone without even pausing. This brutal reversal erased weeks of gains in a flash. The next potential support level is the 50% area of its parallel channel, around $4.22, a level that gains significance from its confluence with a horizontal pivot from June 2025. This violent price action is a humbling reminder of the risks inherent in this market. As Drew aptly stated, "This is why they call Nat gas the Widowmaker folks… it can really whip around price action can make you a lot of money or can make you feel a lot of pain."

Precious Metals and Crypto Await Their Next Move

While silver stole the spotlight, its counterparts in gold and Bitcoin are setting up for their own potential moves. Gold is currently in a state of "beautiful bullish consolidation." The chart is forming a bull flag, a pattern that suggests the recent upward momentum is simply pausing before its next leg higher. The measured move from this pattern targets the all-time highs at the top of its parallel channel, right around $4,376. The chart is coiling, seemingly building energy for that potential breakout.

Bitcoin, meanwhile, is at a critical inflection point. It has been fighting to reclaim the 50% area of its parallel channel since late November. This level has proven to be formidable resistance, with multiple rejections. A decisive, multi-day breakout above this zone would be technically significant, as it "will open the door for probabilities to tag just over a hundred thousand dollars." This target aligns with a long-term inclining trendline, adding another layer of technical confluence to the setup.

Navigating Individual Stock Setups

Beyond the macro picture, today's show highlighted several individual stocks with compelling technical setups, ranging from parabolic runners to post-earnings casualties.

High-Flyers Approaching Key Levels: Lumentum Holdings (LITE) has been on an incredible run, soaring nearly 700% since April. It is now extremely overbought and piercing the top of a rising wedge pattern. Drew’s analysis suggests this could be a "last-ditch effort before profit-taking comes in," advising extreme caution and patience. For those interested, a much safer entry point would be to wait for a significant pullback, potentially to the sub-$300 level. Similarly, APP has rallied 47% since late November and is now testing its all-time highs right at the 50% area of its parallel channel around $739.50. This confluence of resistance creates a potential double-top formation, offering a possible day trade shorting opportunity for experienced traders.

Breakouts and Breakdowns: Microchip Technology (MCHP) is another semiconductor name that has been ripping higher, recently breaking out from a key declining trendline. While the stock is overbought on the daily chart, the weekly chart is not, suggesting it has more room to run after a period of consolidation. The disciplined approach here would be to wait for a pullback to retest the broken trendline, just under $63, to initiate a position. On the other side of the spectrum, Campbell Soup (CPB) was punished after its earnings report, falling over 5%. Despite a double beat on earnings and revenue, investors were disappointed that the company merely maintained its guidance instead of raising it. This sell-off is pushing the stock down toward a major long-term weekly support trendline around $26.68. For patient investors, a move to the sub-$27 area could present a compelling long-term entry point.

Conclusion: Navigating a Market of Contradictions

As we head into the highly anticipated FOMC announcement, the market is a tapestry of conflicting signals. Rising Treasury yields suggest macroeconomic caution, yet the Dow Transports are signaling robust economic strength ahead. Commodities are experiencing wild, divergent swings, while individual stocks present unique opportunities based on their own technical merits.

This complex environment underscores the importance of a disciplined, technically-focused approach. Rather than trying to predict the macro outcome, traders can find an edge by identifying specific, high-probability levels where multiple factors align. Whether it's the $62.23 resistance in silver, the sub-$27 support zone in Campbell Soup, or the trendline retest in Microchip Technology, the charts provide a clear map of risk and reward. By remaining patient, respecting the levels, and managing risk, traders can confidently navigate the volatility that is sure to come.