Trading The Close Market Recap - 12/24/2025: S&P All‑Time High on Thin Volume: Trendline Divergences Threaten Tech, Small Caps & Commodities

With the holiday season in full swing, the S&P 500 delivered an early gift to the bulls, closing at a brand new all-time high. In this afternoon's Trading The Close Market Recap, Pro Trader Drew Dosek, back at the helm at Verified Investing, unpacked the low-volume "holiday float" driving the market and provided a masterclass on one of technical analysis's most fundamental tools: the trendline. Today's session was a deep dive into how simple lines drawn on a chart can reveal critical support, resistance, and the potential for major market shifts.

The All-Time High and the Holiday Float

The market's ascent to a new closing high in the S&P 500 is certainly cause for celebration for long-term investors. The Dow Jones gained 0.62%, the NASDAQ added 0.22%, and the S&P 500 finished up 0.34%. However, the context of this move is crucial for traders. As Drew pointed out, this rally is occurring on exceptionally light volume, a classic characteristic of the trading days between Christmas and New Year's.

A look at the S&P 500's 10-minute chart from today tells the story: a relentless grind higher for the first few hours of the session, followed by sideways consolidation. This type of price action, often referred to as a "holiday float" or "Santa Claus Rally," can be deceptive. With major institutional players largely on the sidelines, smaller buy orders can have an outsized impact, pushing the market steadily higher without significant conviction.

Another contributing factor is the flow of funds from end-of-year retirement accounts. Many 401(k) and other investment plans have mandatory contributions that are put to work in the final weeks of the year. This forced buying pressure, regardless of price, can create an artificial tailwind for equities. The key takeaway is that while the new high is technically bullish, its sustainability will be tested when full institutional volume returns in the new year. The current price action suggests the S&P 500 may simply trail its inclining trendline until the big players return to the game in 2026.

The Art and Science of Trendline Analysis

The central theme of today's analysis was the power of the trendline. For many new traders, technical analysis can seem like a complex web of esoteric indicators. However, as Drew demonstrated across multiple charts, the simple act of drawing a line connecting key pivot points can provide immense clarity. He broke down the process with the chart of the IWM, the Russell 2000 small-cap index:

"All you have to do to draw a good trendline is find a major pivot, as you see I've done so right here from this November low, then draw it over to the very next significant pivot."

This straightforward technique is the foundation of understanding market structure. A trendline represents the market's directional momentum. When price is above an inclining trendline, the bulls are in control. When it bounces off the line, support is confirmed. But when price consolidates on or trails the trendline, it often signals a loss of momentum and a potential breakdown.

We see this playing out in the IWM right now. After bouncing from its trendline, the price has chopped right back into it. For small-cap bulls, seeing the price separate and move away from this line is critical. A failure to do so could lead to a breakdown, with initial support at the December 17th lows and a more significant level down at $240.09. This same analysis provides a clear roadmap for Bitcoin, which is currently struggling below a similar near-term trendline, signaling potential weakness.

Divergence Among the Indices

While the S&P 500 carves out new highs, a look under the hood reveals a more complex picture. The major indices are not moving in lockstep, a divergence that often precedes a shift in market character.

The tech-heavy Nasdaq (QQQ) is not at all-time highs. Instead, it's approaching a significant resistance level at $624.97, an area of prior consolidation. The expectation is for the QQQ to tag this level and enter a period of sideways chop as it builds energy for its next move.

Meanwhile, the semiconductor index (SMH) has staged a powerful V-shaped recovery, bouncing perfectly off the 50% area of its parallel channel. It is now pushing towards resistance at $367.56, which also corresponds with the top of its channel and the prior all-time high from December 10th. Given that the SMH often leads the broader market, its interaction with this stiff resistance zone will be a critical tell for the entire tech sector.

This divergence—S&P 500 strong, Nasdaq at resistance, and small caps (IWM) showing weakness—suggests that the market's strength is not uniform. Traders must be selective, as the environment that is lifting the broad market may not be enough to push tech and small caps through their respective overhead resistance levels.

Commodities at Critical Inflection Points

The commodity markets are offering some of the most dramatic charts, providing both opportunities and cautionary tales.

Gold has made a powerful move, breaching the psychological $4,500 level before retreating slightly. After fighting its way back into the top half of its parallel channel, it has now broken out. By applying the same trendline analysis—connecting the major prior highs—we can project the next major resistance target. Should the current momentum continue, gold could be heading towards the $4,700 area.

In stark contrast, silver presents a chart that should give bulls pause. After completing a measured move from a large bull flag pattern, silver has continued to rocket higher in an "exaggerated form." This parabolic advance has pushed the weekly Relative Strength Index (RSI) to nearly 90—a deeply overbought reading, as anything over 70 is considered extended. Such moves often create an "air pocket" below, where a lack of support can lead to a swift and sharp decline once sellers take control. Two key levels to watch for a potential pullback are a long-term trendline from 1980 at $62.50 and the 50% area of its current channel around $57.87.

The natural gas chart serves as a perfect example of what can happen after a parabolic move like silver's. Known as "the widow maker" for its extreme volatility, natural gas experienced a massive spike followed by an equally massive decline. It is now attempting to re-test its broken inclining trendline from below, which should now act as resistance around $4.16. This price action is a textbook example of a trendline break and retest, a classic setup for traders looking to short a security.

Navigating News and Setups in Individual Stocks

Individual stocks provided their own set of compelling technical narratives, from news-driven volatility to the slow development of classic chart patterns.

Intel (INTC): News that NVIDIA was halting tests of Intel's 18A chips sent the stock tumbling at the open, down as much as 4%. However, the decline was perfectly halted by a key inclining trendline, with the day's low of $34.95 stopping just short of the gap fill at $34.50. Investors quickly scooped up the shares, erasing most of the losses. Despite the impressive recovery, the broader pattern of a big move down followed by sideways consolidation still suggests a potential for lower prices. A third test of a trendline is often the one that breaks, making the next support levels at $34.16 and $32.89 critical to watch.

Apple (AAPL): Despite a positive day, Apple's chart is quietly forming a potentially bearish setup. A large head and shoulders pattern appears to be developing, with the left shoulder and head already formed. The critical level to watch is the neckline, a trendline currently around $267.71. A break below this level would trigger the pattern, with a measured move targeting the 50% area of its parallel channel, right around $250. This would present a significant opportunity for those who missed the stock's run-up.

Broadcom (AVGO): Following a massive post-earnings decline, AVGO has been clawing its way back. The price was saved by the 50% area of its parallel channel, which acted like a net, and has now pushed back into the upper half of the channel. However, major resistance looms just ahead. The horizontal resistance at the $362 level converges with a declining trendline drawn from the prior highs. This confluence of resistance in the $362-$364 zone creates a high-probability area for the rally to stall, offering a potential swing short opportunity for disciplined traders.

Conclusion: Reading the Lines into 2026

As we close out the trading week and head into the Christmas holiday, the market has provided a clear lesson: trendlines matter. From the S&P 500's new high to the struggles in the IWM and Bitcoin, and the extreme moves in commodities like silver and natural gas, these simple lines provide a vital framework for understanding market psychology and identifying key decision points.

The current low-volume environment demands caution. While the path of least resistance has been higher, these moves lack the institutional conviction needed for long-term sustainability. The divergences between the major indices and the developing patterns in key stocks suggest that 2026 will begin with significant technical questions to be answered. By identifying these critical trendlines and confluence zones in advance, traders can prepare to act with discipline and confidence when the real volume returns.