Market Insights: Monday, March 10th, 2025
Market Overview
Wall Street suffered a brutal sell-off on Monday as concerns over the health of the U.S. economy intensified, triggering a wave of selling across all major indices. The Dow Jones Industrial Average plunged nearly 900 points, shedding 2.08%, while the S&P 500 dropped 2.66%, extending last week’s declines. However, the biggest hit came to the Nasdaq Composite, which plummeted 3.80%, marking its worst single-day decline since 2022.
The technology sector led the rout, as investors dumped the so-called "Magnificent Seven" stocks amid fears of a slowing economy. Tesla nosedived 15%, suffering one of its worst trading days in years, while Nvidia, Apple, Alphabet, and Meta all sank by more than 4.4%. The broad-based decline followed comments from President Trump and his top economic advisors, who admitted the possibility of economic turbulence ahead. Meanwhile, escalating trade tensions with Mexico and Canada continue to add uncertainty, as negotiations remain deadlocked with no clear resolution in sight.
Investor focus will now shift to key economic data releases later this week, with February's Consumer Price Index (CPI) report on Wednesday and the Producer Price Index (PPI) on Thursday, both of which could influence Federal Reserve policy expectations. With heightened volatility and fading bullish momentum, traders are bracing for more turbulence in the days ahead.
SPY Performance
SPY opened the session at $570.99 but faced relentless selling pressure, sinking to a session low of $555.60 before closing at $560.61, down 2.66% for the day. Trading volume surged to 86.43 million shares, well above average, highlighting the intensity of selling pressure. The ETF struggled to hold its 200-day moving average at $570, which now acts as major resistance. With SPY firmly below key levels, sentiment remains deeply bearish.
Major Indices Performance
Monday’s rout saw the Nasdaq Composite leading losses, down a staggering 3.80%, as technology stocks took a massive hit. The S&P 500 followed, falling 2.66%, marking its worst daily drop in months. The Dow Jones Industrial Average declined 2.08%, weighed down by weakness in industrial and financial stocks. Meanwhile, the Russell 2000 shed 2.54%, as small caps struggled to find support amid deteriorating market conditions.
The market remains trapped under selling pressure, with growth stocks and high-beta names suffering the most. The defensive sectors—such as utilities and healthcare—held up slightly better but still ended in the red. With the market in risk-off mode, the upcoming inflation reports will be closely monitored to determine whether the Federal Reserve may shift its stance on interest rates.
Notable Stock Movements
The "Magnificent Seven" stocks endured a brutal session, with Tesla leading the declines, sinking 15% as concerns over slowing demand and broader market weakness intensified. Nvidia, Apple, Alphabet, and Meta all slumped over 4.4%, reflecting widespread selling pressure in the technology sector. Microsoft and Amazon also tumbled, though they managed to fare slightly better than their peers.
Tesla’s crash officially erased the gains it had made following Trump’s election victory, underscoring investor skepticism about the company’s near-term prospects. Nvidia, one of the market's best-performing stocks in 2024, faced renewed selling as traders rotated out of high-growth names, despite continued optimism around AI. The sell-off in tech stocks suggests investors are moving toward more defensive positioning amid economic uncertainty.
Commodity and Cryptocurrency Updates
Crude oil dipped 1.60% to close at $66.97 per barrel, with our model still projecting further downside toward $60, as global demand concerns persist. Gold fell 0.75%, closing at $2,892 per ounce, reflecting reduced safe-haven demand as investors liquidated positions.
Bitcoin suffered a sharp decline, plunging 5.02%, closing just above $78,900. The cryptocurrency remains under pressure, though we maintain a buying range between $83,000 and $77,000, where strong technical support exists. Despite the pullback, longer-term sentiment in the digital asset space remains constructive, however we will not continue to buy below $77000 as the next lower support level is $65000.
Treasury Yield Information
The 10-year Treasury yield fell 2.32%, closing at 4.218%. While yields remain below the critical 4.5% level, which typically triggers major equity pressure, any move toward 4.8% could accelerate downside momentum. If yields breach 5%, markets may experience a significant correction, with a potential 20% decline from recent highs. The bond market continues to price in recession risks, reinforcing expectations that economic growth will weaken in the coming months. While falling yields should be supportive of the market, in this instance it is a warning sign that the administration’s supply side economic policies will fail to achieve the desired outcomes which will lead to much higher interest rates in the long term.
Previous Day’s Forecast Analysis
Friday’s forecast projected a trading range between $565 and $585, with a bearish bias below $575. Resistance was expected at $578, while downside targets were set at $570 and $565. The analysis recommended short trades below $575 while advising long entries on dips toward $570, provided key support levels held firm.
Market Performance vs. Forecast
Monday’s price action largely followed the forecasted bearish trajectory. SPY opened near $570, quickly broke below key support at $565, and continued its descent to a session low of $555.60 before closing at $560.61. The bearish bias played out as expected, with short positions proving highly profitable. Traders who followed the strategy had significant opportunities to capitalize on the downside move, particularly around the $570 rejection level and the sharp decline through support at $565.
Premarket Analysis Summary
Monday’s premarket analysis, posted at 8:55 AM ET, identified $570 as the bias level, with downside targets at $567 and $564. The expectation was for continued pressure below $570, with rallies likely to be sold. If volatility stagnated later in the session, a rally attempt was possible. The analysis favored short entries below $570 and long entries if price reclaimed $570.
Validation of the Analysis
Monday’s market adhered closely to the premarket outlook, with SPY failing to hold $570 and selling off aggressively. The $570 level was identified in both the post and premarket as reader of this newsletter know this means the probabilities of a level being material increase. In this case we advise trading larger and seeking larger targets. The expected downside targets of $567 and $564 were quickly breached, reinforcing the forecast’s accuracy. Traders who followed the premarket guidance were well-positioned to capitalize on the bearish momentum.
Looking Ahead
This week’s key events include the JOLTS Job Openings report on Tuesday, followed by the CPI report on Wednesday and PPI on Thursday. With inflation data in focus, volatility is expected to remain elevated as traders assess the Fed’s next moves.
Market Sentiment and Key Levels
SPY closed at $560.61, with resistance now at $562, $565, and $570. Support sits at $560, and $555, with a failure to hold $555 opening the door to a retest of the August lows at $510. Bulls need to reclaim $585 to shift momentum, while bears remain in complete control below this level.
Expected Price Action
Our AI model forecasts a trading range between $550 and $570, suggesting continued volatility. The bias remains bearish below $570, with downside targets at $555 and $550. A break above $570 could spark a relief rally toward $575, but further upside remains unlikely unless macro uncertainties ease.
Trading Strategy
Short trades are favored below $570, targeting $560 and $555, while long trades should only be considered on failed breakdowns at key support levels. Traders should stay nimble, given heightened volatility, and focus on quick profit-taking. VIX remains elevated at $27, signaling increased risk and large price swings. Caution is advised.
Model’s Projected Range
The model’s maximum projected range for Tuesday is $547.75 to $573.50, in a Put-dominated market, implying bearish, trending price action. Key resistance lies at $562, $565, and $567, while support sits at $560 and $555. There is little below $555 to keep price from falling further. The fear driven bears pushed prices to lows not seen since September of last year. There is little to suggest price will slow or stall at the current level. Watch $555 given this is a level that has been supportive in the past. A break of $555 and price will pause at $540 but ultimately make its way to the August low at $510, representing a 16.5% decline from the highs. Historically this is about average so it would not be out of the question for an overvalued, fear driven market to drop to these levels. Price is now below the bear trend channel from the December highs which will be redrawn should price continue its descent. SPY is well below the 200 DMA which will act as resistance at $570. The bears remain in complete control.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI is currently in a Bearish Trending Market State, with price closing just below MSI resistance. The MSI range is average without extended targets below, implying a weak bear trend. Overnight the MSI rescaled to a ranging state and then to a narrow bearish state with price testing major support at $570 at the open. Extended targets began printing at 7:50 am ET and by the open, price has moved back to MSI support turned resistance just below $570. Price fell to another major level while the MSI printed extended targets, but did not rescale lower until 1:12 pm ET when price finally broke below $565. The MSI then entered a series of rapid rescalings lower with extended targets below indicating the herd was participating in todays massive decline. Once price reached MSI support at $555.88, extended targets stopped printing and the market finally saw some profit taking from short sellers. MSI support is currently $555.88 and resistance is at $561.11.
Key Levels and Market Movements:
We stated Friday if “$565 fails, the relief rally fails and its highly likely price moves toward $555”. We also stated the “MSI isn’t forecasting a very strong rally given how narrow the range is, therefore, price will likely retest today’s lows at some point”. And so today we nailed both of these forecasts exactly and to the penny. With the market bouncing around the 200 DMA in the premarket and coming out of a narrow MSI bull trend, weakness was easy to see given SPY was unable to hold above $570, a major level and the 200 DMA. This level was confirmed in the pre and post market newsletters and when support became resistance at the open with price failing to move above the 200 DMA, with MSI resistance and extended targets below, we were short in size out of the gate. Given both newsletters coincided with a short below $570, we went in heavy and looked for a first target at the premarket level of $564 where we took 70% of our trade off and held our 30% runners for lower levels. While we didn’t necessarily think $555 would come into play today, we knew this was a major target below. So as soon as the MSI began rescaling lower we knew we had a solid trade on and decided to hold our runners until the MSI stopped rescaling. This got us all the way to $555.88 where we closed our remaining 30% and called it a day. One and done but in major size, which is the equivalent of three or four trades. And while we could have reversed long at 3 pm, after such a monster move, we went into profit protection mode and kept our powder dry for tomorrow. Today was easy to see and easy to trade with the MSI providing perfect information along the way. While we only took one trade, trading in large size and holding for major targets is what we live for and what we got handed to us today. We have said forever that one trade a day is enough to make a substantial living. Wait for set ups like a hunter stalking prey and when the ten-point buck comes along, pounce on it with all you have and you will eat well for an entire season. We had another great day thanks to the MSI showing us who controls the market, when and where they took control while providing proper targets for our exits. When combined with our model’s levels and the trading plan we create each day, we more often than not end the day solidly in the green. The MSI does this every single day, day in and day out keeping users out of trouble with actionable information to ensure traders stay on the right side of the market, trading with the trend, while providing levels to take profits. We highly recommend integrating the MSI into your trading arsenal, combining it with our trading plan, to maximize your long-term success.
Trading Strategy Based on MSI:
Tuesday has Jolts Job Openings which is not likely to move the market materially. The jobs picture is likely to get much cloudier in the next month due to the impact of government layoffs but for tomorrow, is unlikely to change the trajectory of the market. Absent external macro data or news events that rattle the market, we are in a market driven by tariff news so anything can happen. Our general lean for Tuesday is that after falling eleven out of the last fourteen days, with SPY down over $50 and over $22 since Friday, SPY may attempt to back test some higher levels. $562 is the first level to watch, then $565 and $567. Should SPY clear these three levels, $570 is a major decision zone the bulls need to recover to have any hope of reversing this decline. Even recovering $570 would still be considered just a relief bounce. If $555 fails, another leg starts to the downside targeting $553 initially but likely moving toward $550. $550 is a major level that must hold for the bulls to have any hope of keeping price from falling to the August lows. If $550 fails, $500 is clearly in play. Volatility is up significantly today but has still not reached the capitulation level of VIX @ $40. Should you see the VIX spike to this level, the bottom is likely near. The MSI isn’t forecasting a very strong bear trend but the range is about average so there could be another test of $555 before the market decides what it wants to do. Watch for extended targets to start printing again and should that happen, get short and stay short. $570 is now the pivot between higher and lower prices in the current larger range of $575 to $545. Above $570 and the bulls will press for higher prices. Below $570 and the bears will retest $555 and lower. Therefore we favor short trades to as high as $570, but above $570 will seek failed breakouts only as triggers to entry. We also favor long trades but only on failed breakdowns and only from our models major support levels. A break above $570 and the bulls will attempt to push price toward $575. Our model continues to forecasts rallies will be sold until price reclaims $585 OR until the trade wars are suspended. There are still major risks facing the market this month including the risk of a government shutdown and the debt ceiling debate. Therefore rallies will likely be used as opportunities to lighten long positions. Until these macro issues are resolved, favor the bears, selling rallies to as high at $570. Continue to seek failed breakouts or other topping patterns from major levels when possible. Keep an eye on the MSI for clues and be sure not to fight extended targets given they indicate the herd is participating in any move, higher or lower. Use the MSI to keep you safe, positioning you on the right side of the market, which is critical to trading success. If you utilize our model’s levels with the MSI to stalk entries and exits, trading with the controlling party, your odds of success increase dramatically. If you do not have this valuable tool, we highly suggest contacting your representative to secure a copy.
Dealer Positioning Analysis
Summary of Current Dealer Positioning:
Dealers are selling $561 to $569 and higher strike Calls while buying $570 to $580 Calls implying Dealer’s belief that once price breaks above $569 (the 200 DMA), there is a strong chance it will continue higher. But the resistance between $560 and $569 is significant therefore Dealers are selling Calls implying only a minor belief the $570 level will be reclaimed on Tuesday. To the downside Dealers are buying $560 to $556 and lower strike Puts while also selling $555 to $535 Puts implying the Dealers belief there may be a floor in the market on Tuesday at $555. While only a small position, $550 certainly looks to be the lowest the Dealers see price dropping to on Tuesday. Dealers are selling/buying Puts in a 2:1 ratio to the Calls they are selling/buying, implying a neutral posture for Tuesday. This positioning is unchanged from today. However Dealers are selling Puts which they typically only do when they are certain price will stay above a specific level. Dealers continue to own major downside protection and keep adding to their Put protection with very far out of the money options in case the market continues to unravel.
Looking Ahead to Friday:
Dealers are selling $585 to $600 and higher strike Calls while buying $561 to $584 Calls indicating the Dealers desire to participate in any rally this week to as high as $600. Dealers do not seem to believe prices will exceed $600 by Friday indicating a ceiling to any recovery that may develop. To the downside, Dealers are buying $560 to $530 and lower strike Puts in a 1:1 ratio to the Calls they are selling/buying, reflecting a slightly bullish view for the week. Dealer positioning has changed from neutral to slightly bullish. Dealers have added significant downside protection at much lower levels, even as low as $430. As we said Friday, this represents fear in Dealer positioning which was certainly warranted today. We stated Friday “this is a new development which should not be overlooked”. Our timing couldn’t have been any more appropriate. We advise reviewing Dealer positioning daily for clues to the market’s direction given Dealer positioning changes and it’s essential to monitor these updates for shifts in sentiment.
Recommendation for Traders
Our advice for Tuesday is to remain alert and exercise caution given the continued, economically hostile policies coming out of the White House. The market is in full blown crash mode and its likely rallies will continue to be sold. We advise caution, adjusting to the current climate, being prepared to trade with the trend, only contemplating counter trend trades when price is testing a major level and the MSI is not printing extended targets. Use a failed pattern as a trigger to entry and you will achieve the best results. While we continue to advise two way trading from the “edges” using our favorite failed breakout and failed breakdown patterns, do not fight the trend. If you do countertrend trade, do so in quarter size given the strength of the last two days. The bears are in complete control and at a minimum $570 needs to be reclaimed for the bulls to have any chance of price moving higher. A break above $570 will target $575 but $600 still needs to be reclaimed for the bulls to take control away from the bears. A failure to move above $570 and price will continue lower to retest $555 and a break of this level will lead to a test of the August lows at $510. Stay nimble, continuing to monitor key levels seeking to initiate entries from our model’s major levels with the controlling party, which is currently the bears. Be sure to review the premarket analysis before 9 AM ET for the day’s updates.
Good luck and good trading!
