Market Insights: Monday, March 17th, 2025
Market Overview
Stocks climbed for the second consecutive session on Monday as investors looked ahead to the Federal Reserve's interest rate decision later this week. The S&P 500 rose 0.6%, extending Friday’s relief rally, while the Dow Jones Industrial Average added over 350 points, gaining 0.85%. The Nasdaq Composite lagged with a modest 0.31% gain as tech stocks, particularly Tesla and Nvidia, struggled to keep pace with the broader market.
The latest retail sales report fueled speculation that the Federal Reserve may be more inclined to cut interest rates later this year. February’s retail sales data showed a weaker-than-expected 0.2% increase, significantly below the 0.6% forecast, while January’s decline was revised even lower to -1.2%. The weaker consumer spending data raised concerns about economic momentum but simultaneously increased expectations that the Fed might intervene with rate cuts sooner than anticipated.
Investor sentiment was further rattled by a sharp decline in the New York Fed’s Empire State Manufacturing Index, which plummeted to -20 in March from a previous reading of 5.7 in February. Treasury Secretary Scott Bessent attempted to ease concerns over market volatility, stating in an interview that stock market corrections are “healthy” and that there are “no guarantees” the U.S. will avoid a recession.
As the Federal Reserve begins its two-day meeting on Tuesday, Wall Street is largely expecting no immediate rate changes but will be scrutinizing Chair Powell’s guidance on future policy. With economic uncertainty mounting and ongoing tariff-related worries, traders remain cautious despite Monday’s gains.
SPY Performance
SPY rose 0.75% on Monday, closing at $567.01 after opening at $562.79. The ETF traded within a range of $562.35 to $569.71, with trading volume at 43.77 million shares—slightly below average. SPY’s rally allowed it to test the critical 200-day moving average at $570 but failed to break through. Bulls will need to reclaim this level to sustain the current rebound, while failure to do so could see price action revert toward the $560-$565 range.
Major Indices Performance
The Russell 2000 led Monday’s market gains with a 1.26% rally, showing strength in small-cap stocks. The Dow Jones Industrial Average followed closely with a 0.85% gain, fueled by a rebound in economically sensitive sectors. The S&P 500 climbed 0.6%, continuing its recovery from last week’s correction-level losses. The Nasdaq Composite trailed the broader market, rising just 0.31%, as megacap tech stocks weighed on performance.
The broad market strength was driven by renewed investor optimism ahead of the FOMC meeting. However, sector performance was mixed, with Energy and Real Estate stocks leading the way, while high-growth tech stocks saw some weakness.
Notable Stock Movements
The “Magnificent Seven” stocks had a mixed session, with Microsoft, Apple, and Netflix posting gains, while Tesla led the decliners with a steep 4.79% drop. Nvidia also struggled, adding to the Nasdaq’s underperformance. The weakness in high-valuation tech names signals some risk-off sentiment among investors, with money flowing into more defensive and cyclical sectors.
Commodity and Cryptocurrency Updates
Crude oil climbed 0.43% to settle at $67.48 per barrel, though our model continues to forecast a move lower toward $60 due to weakening economic conditions. Gold gained 0.55%, closing at $3,010 per ounce, as investors sought safe-haven assets ahead of the Fed meeting.
Bitcoin edged up 0.30%, closing just above $84,100. We remain buyers of Bitcoin in the $83,000 to $77,000 range as a trading vehicle, with profit targets around $85,000.
Treasury Yield Information
The 10-year Treasury yield dipped slightly, closing at 4.302%, down 0.14%. The yield remains below the critical 4.5% threshold that would pressure equities, though any move above 4.8% could trigger a deeper market correction. The bond market remains highly sensitive to economic data, and all eyes are on the Fed’s Wednesday statement for guidance on future rate policy.
Previous Day’s Forecast Analysis
Friday’s forecast projected a trading range between $555 and $570 for SPY, with resistance at $565 and $570 while support was expected at $560 and $555. The analysis noted that SPY needed to hold above $560 to continue its recovery, while a failure at this level would send prices lower. The model anticipated choppy trading, with the potential for a move higher if sentiment improved.
Market Performance vs. Forecast
Monday’s market action largely followed our model’s expectations. SPY opened near $563, held above $560 throughout the session, and attempted a breakout toward the 200-day moving average at $570. Resistance at $570 proved strong, preventing further gains. The forecasted trading range was respected, and traders who followed the model’s guidance were able to capitalize on the movement between support and resistance levels.
Premarket Analysis Summary
Monday’s premarket analysis, posted at 8:35 AM ET, identified $562 as a critical bias level, with upside targets at $564, $566, and $568. Downside support was noted at $560 and $555. The analysis suggested that if SPY could hold above $562, it would have the potential to reach higher levels, while a failure to do so would result in more sideways action.
Validation of the Analysis
SPY adhered closely to the premarket projections, with the price action respecting the identified levels. The ETF climbed above $562 early in the session, reached a high of $569.71, and then pulled back slightly into the close. The resistance at $570 held firm, preventing a breakout. Traders who followed the premarket guidance were able to trade within well-defined levels and capitalize on the market’s movement.
Looking Ahead
The Federal Reserve’s FOMC statement on Wednesday will be the key event of the week. There is little economic news on Tuesday, meaning the market is likely to trade in a rangebound manner ahead of the Fed’s decision. Thursday’s Unemployment Claims data will also be closely watched for further economic insights.
Market Sentiment and Key Levels
SPY closed at $567.01, hovering just below its 200-day moving average at $570. Resistance remains at $569, $570, and $574, while key support levels to watch are $565, $563, and $560. Bulls need to push above $570 to maintain upside momentum, while bears will look to fade rallies below this level.
Expected Price Action
Our AI model projects a trading range between $560 and $575 for Tuesday. The market remains in a consolidation phase, with a slight bullish bias due to the recent rebound. If SPY holds above $565, a test of $570 and possibly $575 is likely. However, a break below $565 could send prices back toward $560 and potentially lower. Its unlikely the first attempt to break $570 succeeds but subsequent retests of this level will absorb remaining liquidity allowing price to move higher.
Trading Strategy
Long trades should be considered if SPY holds above $565, with upside targets at $570 and $575. However, if SPY fails to break resistance at $570, short trades could be initiated, targeting $565 and $560. A break of $560 and SPY will retest much lower levels. Probabilities favor a retracement of the last two days rally with the bulls needing to keep price above $560. Given ongoing volatility, traders should maintain disciplined stop-loss levels and adjust their risk accordingly.
Model’s Projected Range
The model’s projected maximum range for Tuesday is $562.25 to $575.75, indicating a narrowing range, indicating continued consolidation. SPY remains Call-dominated, implying a slightly bullish bias, but resistance at $570 must be overcome for the rally to continue. With a narrow range expect two way price action from the edges until FOMC on Wednesday. Retail sales rose today but came in lower than forecast implying a slowdown in consumer spending, albeit with an overall healthy consumer. The market rallied on the news as an excuse to build on Friday’s relief rally. SPY tested the 200 DMA which successfully kept prices from rising further. The 200 DMA at $570 is a major level for the bulls to reclaim and will continue to contain price for at least one more test. As the liquidity at this level is absorbed, subsequent tests of this level will allow price to break higher. That said, there is major resistance above $570 to $575 so expect a battle as price attempts to move to higher levels. It’s likely price retests lower levels first with the bulls needing to hold $560. Below this level, there is little to keep price from falling further to at least $550. $550 remains a critical level of support which also needs to hold on any retest. We don’t expect to see a test of this level tomorrow unless the administration comes out with additional economically hostile policies or the FOMC is overly hawkish. The bears still control the market overall but if the bulls can move above $570, SPY will inch its way to $575. If price breaks $565, SPY will retrace to $560 at a minimum which the bulls must hold, otherwise price will fall back to the lows of the range at $550. A failure of $550 and its likely price will fall to at least $545 as it works its way to the August low at $510, a 16.5% decline from the highs which is historically about average. SPY remains at the lower end of the bear trend channel from the December highs with room both higher and lower. This is a broad channel which will likely contain price for at least a few weeks.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI is currently in a Bullish Trending Market State, with price closing mid-range just below the 200 DMA. The MSI range is wide without extended targets above, implying a moderate bull trend. Overnight the MSI remained the same as Friday with a very narrow range with extended targets printing off and on for much of the morning session. This narrow range contained price in a choppy, narrow band all morning. But finally at 1:36 pm the MSI rescaled higher several times in rapid succession with extended targets below which pushed price to the 200 DMA where it ran into major resistance. Extended targets continued printing until a few minutes before the close and price fell back to mid MSI range. The herd participated in today’s continuation of Friday’s rally and with a wide MSI and recent extended targets, the likelihood of at least one more attempt to reclaim the 200 DMA is high. MSI support is currently $562.96 and resistance is $568.44.
Key Levels and Market Movements:
We stated Friday “our general lean is SPY will back test $560 which must hold for the bulls to attempt to push price to the 200 DMA”. We also stated, “If the bulls are successful staying above $560, they will find material resistance at $565 which they need to clear to get to the next major resistance level of $570”. Finally we stated, “Watch for the MSI to rescale higher to confirm the continuation of today’s rally.” Today, all three forecasts once again were highly accurate. First we expected a continuation of Friday’s rally as long as $560 held. $560 held in the premarket after Retails Sales were announced, so our bias was looking for long trades at a major support level with the goal of reaching $565, given this was a level we stated would provide resistance. At the open on a retest of $562, a premarket level, and with extended targets below, we were long on the pullback and took a first target at $565, knowing this level would take time to overcome. Price made several attempts to break the $565 level but there was simply too much liquidity to absorb so on the third failed test of this level, we took a second target and moved our stop to breakeven, holding a small 10% runner. We thought we might get stopped out of our long but price stayed above our entry and finally in the afternoon session, the MSI rescaled higher several times in rapid succession. We held our long on the break of $565 looking for our next major level at $570. The premarket identified $568 as major resistance so we knew to look to exit our runner near this level. But with extended targets above, we held until price put in a less than textbook failed breakout at $569.71 and decided that was going to be it for this trade. We exited our runner and waited to see if we might get a shot at a mean reversion short from this level. While the short trade did set up, it did so at 3:50 pm; way too late for us to be interested in risking the day’s gains. So we called it a day with our one and done, again knowing that all three of our statements were once again spot on, allowing us to end the day solidly in the green. Again 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 no material economic news. Should the market do something unusual tomorrow, it will be due to an external catalyst. Prior to FOMC markets tend to settle down and consolidate, building energy for the move once the FOMC statement is released. Therefore without other external macro data or news events which may move the market, we expect price to remain in a relatively narrow range (relative to recent ranges) and trade more sideways, retesting both $570 and perhaps $560. We expect both to hold initially. Repeated tests of any level will cause it to weaken as liquidity dries up allowing price to move through a level. SPY is above $565 and if the bulls want to demonstrate real conviction they will keep it above this level into FOMC. But even if the bulls are unable to keep price from falling to $560, they will still be in good shape heading into Wednesday. A failure of $560 to hold, however and much lower levels come into play. The bulls will step away on a break of $560. For Tuesday after two days of a strong relief rally, our general lean is SPY will attempt to back test $560 which must hold for the bulls to attempt to push price back to and through the 200 DMA. A failure of $560 and price will move to $555 at a minimum. If the bulls are successful staying above $560, they will find material resistance at least one more time at $570. If they keep pressing this level, it too will give way and price will move toward $574. There is a wall of resistance above $570 all the way to $575 so we anticipate the move above the 200 DMA will be slow and more of a slog than a huge push. That said FOMC can and will likely change the narrative so this forecast is for Tuesday only. On FOMC days trade what you see is the mantra. Watch for the MSI to start printing extended targets on a retest of $570 and its likely price breaks through. Should the MSI rescale lower, its likely price at least visits $560. Therefore we continue to favor two way trading, favoring shorts to as high as $570. Above $570 will only seek failed breakouts as triggers to entry. We also favor long trades from our models major support levels below $565. Our model continues to forecast rallies will be sold until price reclaims $585 OR until the trade wars are suspended as 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 $568 to $580 and higher strike Calls while selling very small quantities of $564 and to $567 Puts indicating the Dealer’s belief that the market is unlikely to move much on Tuesday. Dealers only sell Puts when they believe price will remain above a level. That said there are so few Puts being sold it is somewhat immaterial to today’s positioning. Instead seeing the Dealers sell Calls just above the close price indicates Dealers believe price may retrace tomorrow but perhaps not fall materially. To the downside Dealers are buying $563 to $538 and lower strike Puts. Dealers are buying Puts in a 1:1 ratio to the Calls/Puts they are selling/buying, implying a slightly bullish posture for Tuesday. This positioning has changed from strongly bullish to slightly bullish. Dealers were once again spot on with their positioning for today.
Looking Ahead to Friday:
Dealers are selling $579 to $600 and higher strike Calls while buying in size $568 to $578 Calls indicating the Dealers desire to participate in any rally this week to as high as $582. Dealers are heavily invested in $573 to $580 Calls. Should price resume higher by the end of the week, Dealers stand to realize substantial profits. To the downside, Dealers are buying $567 to $540 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 heavily bullish to slightly bullish. Dealers have amassed large quantities of both much lower strike Puts and near the money Calls. This positioning tells us Dealers believe prices will move higher this week, but they are also prepared for any price decline. But with so many Calls in the bank, Dealers are showing optimism into Friday, believing this relief rally has legs to $580 at least. 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 expect muted price action as the market consolidates and pauses ahead of FOMC. Two way trading if favored, but like every day this week, remain alert and exercise caution given the continued, economically hostile policies coming out of the White House. The market is highly reactive to any news, good or bad and it’s probable rallies will continue to be sold until price reclaims the 200 DMA at a minimum. We continue to advise trading smaller, adjusting to current conditions, being prepared to trade what you see and 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. The bears remain in control until $570 is reclaimed. Above $570 the bulls have a chance of pushing price higher. A break above $570 will target $575 but $585 still needs to be reclaimed for the bulls to take more control away from the bears. A failure to move above $570 and price will continue to retest lower levels. A break of $550 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!
