Market Insights: Tuesday, March 11th, 2025

Market Overview

Wall Street extended its losing streak on Tuesday, with stocks struggling for direction after an early rebound attempt faded into another down session. The S&P 500 dipped 0.81% to close just under 5,600, while the Dow Jones Industrial Average tumbled nearly 500 points, or 0.90%, weighed down by a steep decline in Verizon (VZ). The Nasdaq Composite barely held onto gains for most of the session but ultimately slipped 0.12%, reflecting the continued market turbulence.

The session saw heightened volatility as investors reacted to fresh tariff threats from President Trump, who initially vowed to double tariffs on Canadian metals, only to later walk back those remarks. The uncertainty surrounding trade policy added to concerns about slowing economic growth, with traders bracing for potential economic fallout. Additionally, Trump's threats to impose steep tariffs on Canadian auto imports rattled sentiment, stoking fears of supply chain disruptions.

Despite the weak close, some areas of the market showed resilience. Tesla and Netflix led a modest tech rally, offsetting broader weakness in the "Magnificent Seven" group, where Alphabet and Apple finished in the red. Investors are now shifting their focus to Wednesday’s Consumer Price Index (CPI) report, which will provide a key gauge on inflation trends and potentially shape the Federal Reserve’s next policy moves. With markets on edge and selling pressure still evident, traders remain cautious heading into the midweek session.

SPY Performance

SPY opened at $567.59 but faced heavy selling pressure throughout the session, dipping to a low of $552.02 before recovering slightly to close at $556.03, down 0.81% on the day. Volume was elevated at 78.91 million shares, reflecting the ongoing volatility. While SPY attempted to hold above the key $560 level early on, sellers overwhelmed buyers, pushing prices lower. The ETF remains well below its 200-day moving average at $570, reinforcing the current bearish bias.

Major Indices Performance

The Nasdaq Composite was the best-performing major index on Tuesday, managing a modest 0.12% gain as Tesla and Netflix helped lift the sector. However, the broader market continued to struggle, with the S&P 500 slipping 0.81%, weighed down by economic concerns. The Dow Jones Industrial Average was the worst performer, dropping 0.90%, as Verizon and industrial stocks faced notable declines. The Russell 2000 held steady, inching up 0.01%, suggesting some relative stability in small-cap stocks.

Sector performance was mixed, with some tech names rebounding from Monday’s sell-off while financials and industrials remained under pressure. Defensive sectors such as healthcare and utilities showed relative strength but failed to move into positive territory.

Notable Stock Movements

The "Magnificent Seven" stocks saw mixed performance on Tuesday, with Tesla and Netflix leading the gains, each climbing over 3.2%. Microsoft and Amazon also posted modest rebounds, while Alphabet and Apple remained under pressure, declining 1.1% and 2.92%, respectively. The overall price action suggested selective buying in high-growth stocks while broader market sentiment remained cautious.

Tesla’s bounce came after President Trump appeared to show support for the company, calming some investor fears after Monday’s steep decline. Meanwhile, Alphabet’s and Apple’s losses reflected continued rotation away from certain tech names amid ongoing macroeconomic uncertainty.

Commodity and Cryptocurrency Updates

Crude oil rose 0.74% to settle at $66.51 per barrel, though our model continues to forecast further downside, with a move toward $60 still in play. Gold climbed 0.89% to close at $2,925 per ounce, as traders sought a hedge against inflation and market uncertainty.

Bitcoin saw a sharp 4.66% rebound, closing just above $83,000. The cryptocurrency remains volatile, but we continue to favor buying within the $83,000 to $77,000 range, where strong technical support exists. We recently added to our position near the lows and are scaling out as price reaches $85,000 where we expect to see another round of selloffs.

Treasury Yield Information

The 10-year Treasury yield rose 1.59%, closing at 4.280%. While yields remain below the critical 4.5% level that typically pressures equities, any move above 4.8% could accelerate market downside. The bond market continues to reflect recession concerns, and if yields surge past 5%, it will likely trigger a deeper market correction.

Previous Day’s Forecast Analysis

Monday’s forecast projected a trading range between $550 and $570, with a bearish bias below $570. Resistance was expected at $562, $565, and $570, while downside targets were set at $555 and $550. The recommendation favored short trades below $570 and long trades only on failed breakdowns at key support levels.

Market Performance vs. Forecast

Tuesday’s market action largely followed Monday’s bearish forecast. SPY opened near $567, attempted to hold above $560 but quickly broke lower, testing the $555 level before closing at $556.03. The short bias played out well, with traders who followed the strategy having opportunities to capitalize on downside moves, particularly as SPY failed to reclaim key resistance at $562.

Premarket Analysis Summary

Tuesday’s premarket analysis, posted at 7:21 AM ET, highlighted $563 as the bias level, with upside targets at $566 and $568. The downside levels to watch were $560, $557.50, and $552.75. The market was expected to stabilize but remained vulnerable to further declines if support at $560 failed.

Validation of the Analysis

The premarket analysis accurately captured Tuesday’s price action. SPY initially attempted to hold $563 but failed to sustain momentum, slipping below $560 and eventually testing the $555 level. The bias level of $563 acted as a ceiling, and traders who followed the short recommendations below this level had profitable opportunities.

Looking Ahead

Wednesday’s CPI report will be the key event of the day, with investors closely watching inflation data to gauge the Federal Reserve’s potential policy response. A hotter-than-expected reading could further pressure equities, while a softer report may provide some relief.

Market Sentiment and Key Levels

SPY remains in a bearish setup, closing at $556.03. Resistance levels are at $560, $565, and $570, while key support sits at $555 and $551. A failure to hold $555 could lead to a drop to $551 and a failure of $551 would lead to a test of $540. The bulls need to reclaim $570 to shift any of this bearish momentum.

Expected Price Action

Our AI model projects a trading range between $550 and $570 for Wednesday, implying continued volatility. The bias remains bearish below $570, with downside targets at $555 and $551. A break below $551 would lead to $540 with the market on its way to the August lows. A break above $570 could lead to a relief rally toward $575, but macro uncertainties remain a headwind.

Trading Strategy

Short trades remain favored below $570, targeting $560 and $555. Long trades should only be considered on failed breakdowns at major support levels. Traders should follow the short side as long as this weakness continues. Given elevated volatility, traders should focus on quick profit-taking. The VIX remains high, signaling the likelihood of large price swings.

Model’s Projected Range

The model’s maximum projected range for Wednesday is $545.75 to $573.75, reflecting an expanding range in a Put-dominated market. This implies trending price action on Wednesday. Resistance lies at $560, $565, and $570, while key support levels are at $555 and $551. There is little below $551 to keep price from falling further. The tariff driven bears once again pushed prices to lows not seen since September 11th of last year. There is still little to suggest price will slow or stall at these levels. While the market closed above $555 and this level did slow today’s decline, today was another day of declines for the ETF with only three green days in the last three weeks. Another test of  $555 is likely to fail and price will reach $551, below which there is little to suggest price won’t fall to at least $540 as it works its way to the August low at $510. This would represent a 16.5% decline from the highs, which is about average. Therefore it would not be out of the question for the market to drop to these levels. Price is well below the bear trend channel from the December highs and will be redrawn should price continue its descent. SPY is well below the 200 DMA at $570 which will continue to act as resistance. The bears are still in complete control.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Ranging Market State, with price closing mid-range. The MSI range is average, implying some confusion for tomorrow. Overnight the MSI rescaled to a Bearish Trending Market State and continued to rescale lower until the White House announced some possible relief on Canadian tariffs. There were extended targets below sporadically which implied the herd was pushing price lower. But once this news hit, SPY found a base at MSI support at $552.17 and moved higher with the MSI rescaling to a ranging state and then to a narrow bullish state before settling a bit lower in its current ranging state. MSI support is currently $554.71 and resistance is at $559.79.  
Key Levels and Market Movements:
We stated Monday “SPY may attempt to back test some higher levels. $562 is the first level to watch, then $565 and $567.” Additionally we stated even SPY “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”. Today we got a rally overnight to $563.60 which failed as price rejected off MSI resistance after the open at $561.20. With the MSI is a bearish state, we were short at MSI resistance knowing the odds of price reaching MSI support were close to 70%. We took a first target at $555.88 also knowing that $555 to $553 was a likely final target. The MSI rescaled lower and printed a couple of extended targets below. But SPY also set up a textbook failed breakdown at $554 so we decided to wait until extended targets stopped printing before reversing long, closing our runners, looking for price to revisit our major level of $560. Sure enough price reached $560 and SPY set up a perfect failed breakout at this major level. With this level also being MSI resistance, we took a single target and reversed short once again looking for another move back to MSI support. We took first profits at MSI support at the morning’s low but with extended targets printing below, we held our runners to see if $553 would come into play. With extended targets and a series of rapid rescalings lower we continued to hold our runners feeling confident price would move lower. And so it did, allowing us to take a second target at MSI support at $552.20. We waited for price to fall further but news out of the administration hit the wire and price quickly reversed. The MSI stopped printing extended targets and on another textbook failed breakdown, we reversed long just after 1:30 pm, holding for MSI resistance at $558.40. With a first target in hand, we moved stops to breakeven and waited to see if $562 was back in play. Price continued higher so we took a second target at MSI resistance at $562.30 and on another failed breakout at 3:06 pm ET, we closed our long trade and called it a day. While we could have taken a short, given the time of day and the one lone extended target above the MSI, we didn’t want to risk profits on a late day short that actually worked very well. We went four for four with another day of monster gains 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:
Wednesday has CPI data which has the potential to rock the markets depending on the information released. The CPI data will be released in the premarket therefore we advise reviewing price action in the premarket and being prepared to trade what you see. On CPI days experienced traders scale down in size and trade cautiously. Absent external macro data or news events that rattle the market, we continue to be in a market driven by tariff news, which means anything can happen. Price is trading in a large range between $555 and $565. Everything in this range is noise. SPY has not yet back tested higher levels from yesterday at $567 and $570 which needs to happen for price to have any hope of moving materially higher. Should price be able to reclaim $570, we will see $575. But if either a test of $567 or $570 fails, OR if price retests today’s lows at $552, probabilities favor SPY falling to $551 at a minimum and perhaps much lower. While $552 held today, it has not been tested fully and it is unclear whether this level will put up much of a fight. Our model says $551 is the level to watch so should that fail, look out below. Therefore our general lean for Wednesday is that price may attempt to move higher overnight, retesting todays $562 and $565 levels. Any failure there or even as high as $570 and SPY continues to fall. On the other extreme, if $555 fails, SPY will reach $551 initially but more likely move 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 still high at $26.92 but has still not reached capitulation of VIX @ $40. Should you see the VIX spike to this level with an material increase in volume, the bottom is likely near. The MSI isn’t forecasting a trend overnight so price could simply continue to move in the large $10, noise filled range until CPI. 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 only seek failed breakouts as triggers to entry. We also favor long trades but only on failed breakdowns and only from our models major support levels below $555. A break above $570 and the bulls will attempt to push price toward $575. Our model continues to forecast 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 $556 to $562 and higher strike Calls while buying $563 to $590 Calls implying the Dealer’s belief that once price breaks above $563 there is a strong chance it will continue higher. But the resistance between $560 and $562 is significant therefore Dealers are also selling Calls implying only a small belief the $570 level will be reclaimed on Wednesday. That said, this positioning is similar to today and in fact Dealers have increased their size considerably implying more conviction of higher prices. This type of positioning will pay off no matter what happens to price. To the downside Dealers are buying $555 to $552 and lower strike Puts while also selling $551 to $530 Puts implying the Dealers belief there may be a floor in the market on Wednesday at $551. Again the size of Dealers positioning has increased. They nailed the low today almost perfectly. $540 certainly looks to be the lowest the Dealers see price dropping to on Wednesday. Dealers are selling/buying Puts in a 1:1 ratio to the Calls they are selling/buying, implying a slightly bullish posture for Wednesday. This positioning has changed from neutral to slightly bullish. Dealers typically only sell close to the money Puts when they are certain price will stay above a specified level. Dealers continue to own major downside protection and keep adding to this protection with very far out of the money options in case the market continues to unravel.  
Looking Ahead to Friday:
Dealers are selling $576 to $600 and higher strike Calls while buying $556 to $575 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 or even $590 by Friday, indicating a ceiling to any recovery that may develop. To the downside, Dealers are buying $555 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 is unchanged from today. Dealers have added significant downside protection at much lower levels, even as low as $430. 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 Wednesday 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 “tariff crash” mode and its likely rallies will continue to be sold. With CPI tomorrow we advise trading smaller, 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 bear market. The bears remain in complete control and at a minimum $570 needs to be reclaimed for the bulls to have any chance of moving price 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 to retest lower levels. A break of $551 will likely 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!