Market Insights: Wednesday, March 19th, 2025

Market Overview

Stocks surged on Wednesday as investors reacted positively to the Federal Reserve’s decision to hold interest rates steady while maintaining its forecast for two rate cuts this year. The Nasdaq Composite led the gains, climbing 1.41%, while the S&P 500 rose 1.1%, and the Dow Jones Industrial Average advanced 0.92%. Early in the session, markets rallied strongly after Fed Chair Jerome Powell reiterated that inflation pressures from tariffs would likely be “transitory,” and the central bank remains on track for easing later this year.

Despite a brief fade from session highs, stocks finished the day with solid gains as Powell’s commentary soothed concerns over prolonged tight monetary policy. Nvidia rebounded 1.8% after selling off sharply earlier in the week, while Tesla surged over 4.6% following an upgrade from Cantor Fitzgerald. Investors cheered the Fed’s cautious yet accommodative stance, though uncertainty around inflation and trade policy remains a key risk heading into the second quarter.

SPY Performance

SPY gained 1.09% on Wednesday, closing at $567.13 after opening at $562.83. The ETF traded within a range of $561.63 to $570.95, with trading volume rising to 53.86 million shares, above average. The rally allowed SPY to reclaim key resistance levels, briefly touching the 200-day moving average before pulling back slightly into the close. While bullish momentum remains intact, traders will closely monitor whether SPY can hold above $565 to sustain upward progress.

Major Indices Performance

The Nasdaq Composite led the charge, climbing 1.41% as tech stocks rebounded sharply following the Fed's rate decision. The S&P 500 followed with a 1.1% gain, buoyed by broad-based buying across growth sectors. The Dow Jones Industrial Average posted a 0.92% increase, benefiting from strength in financials and industrials. Meanwhile, the Russell 2000 outperformed with a 1.56% jump, signaling renewed investor confidence in small-cap stocks. The market’s strong performance came as traders interpreted the Fed’s stance as dovish, increasing expectations for a more accommodative monetary policy environment in the coming months.

Notable Stock Movements

The "Magnificent Seven" stocks bounced back across the board, led by Tesla, which surged over 4.6% following a bullish rating upgrade from Cantor Fitzgerald. Nvidia recovered 1.8%, reversing some of its recent losses tied to investor skepticism over its GTC event. Meta and Amazon also posted solid gains as the broader tech sector benefited from the Fed’s dovish tone. The positive sentiment suggests that investors are willing to rotate back into high-growth stocks, particularly with rate cut expectations firming up.

Commodity and Cryptocurrency Updates

Crude oil edged higher by 0.45%, closing at $67.05 per barrel, though our model still forecasts a move toward $60 as economic conditions weaken. Gold rose 0.53% to $3,057 per ounce, continuing its upward trend as investors sought safe-haven assets amid ongoing economic uncertainties. Bitcoin surged 3.94%, closing just above $85,200, as risk appetite returned to the crypto space. We remain buyers of Bitcoin in the $83,000 to $77,000 range, with profit targets set around $85,000.

Treasury Yield Information

The 10-year Treasury yield fell 0.91% to 4.242%, retreating further from the 4.5% threshold that could pressure equities. The decline in yields, combined with the Fed’s reassuring message, supported Wednesday’s rally in risk assets. However, traders remain cautious, as any sharp move back toward 5% would likely trigger renewed selling pressure across stocks.

Previous Day’s Forecast Analysis

Tuesday’s forecast projected a trading range between $555 and $570 for SPY, with key resistance at $565, $570, and $575, while support was noted at $560 and $556. The analysis emphasized that holding above $560 would allow for a test of higher levels, while a break below this level could trigger downside momentum. Given the FOMC’s anticipated impact, traders were advised to approach Wednesday’s session with a focus on trading around major levels.

Market Performance vs. Forecast

SPY’s actual trading range on Wednesday aligned closely with our forecast, with a low of $561.63 and a high of $570.95. The ETF tested resistance at $570, briefly surpassing it before retreating slightly into the close. The market’s reaction to the FOMC meeting played out as expected, with an initial spike higher followed by some choppy trading. Traders who followed the model’s guidance were able to capitalize on the upward momentum, particularly as SPY held above $565 for much of the session.

Premarket Analysis Summary

In Wednesday’s premarket analysis, posted at 8:34 AM ET, key upside targets were identified at $564.50, $567, and $570, with support noted at $561.50, $560, and $558. The analysis indicated a bias toward the upside, suggesting that as long as SPY held above $561.50, it could continue to drift higher, potentially reaching the 200 DMA. The report also advised caution around FOMC volatility, noting that any sharp move below $560 could lead to a test of $550.

Validation of the Analysis

The premarket analysis was highly accurate, with SPY following the outlined trajectory almost perfectly. The ETF held above the bias level of $561.50, climbed through the first two upside targets, and tested $570 as projected. The analysis also correctly warned of the potential for choppy trading following the Fed announcement. Traders who positioned long near support levels saw strong gains, while those who exercised caution around resistance were able to lock in profits efficiently.

Looking Ahead

Thursday’s key economic release is Unemployment Claims, which will provide insight into the strength of the labor market. With no major catalysts on Friday or early next week, markets may consolidate within a range until fresh macroeconomic data or geopolitical developments emerge.

Market Sentiment and Key Levels

SPY closed at $567.13, reclaiming key resistance at $565. The next major hurdle lies at $570, with additional resistance at $572 and $575. On the downside, support is located at $565, $563, and $560. Bulls need to hold above $565 to maintain upward momentum, while a failure at this level could lead to renewed selling pressure. The market remains in a cautious uptrend, though bears still hold longer-term control until SPY reclaims the 200-day moving average convincingly.

Expected Price Action

Our AI model forecasts a narrow trading range between $563 and $573 for Thursday, indicating potential two-way action. If SPY holds above $565, another test of $570 and $572 is likely. A breakout above $572 could fuel a push toward $575. However, if SPY falls below $565, expect a pullback toward $563 and possibly $560. The market remains sensitive to macroeconomic developments, so traders should be prepared for volatility.

Trading Strategy

Long trades should be considered if SPY holds above $565, with upside targets at $570 and $572. If SPY struggles at resistance, short trades could be initiated, targeting $563 and $560. The VIX is back below 20 but remains elevated, signaling heightened volatility, so traders should use disciplined stop-loss levels and take profits strategically.

Model’s Projected Range

The model’s maximum projected range for Thursday is $558.50 to $575, with a narrowing Call-dominated structure implying choppy price action. Resistance is at $570, $571, and $575, while support is at $565, $563, and $560. There is little below $560 to keep price from falling to $550. FOMC release was viewed as dovish by the market, which produced the rally to the 200 DMA. There remains material resistance above $570 so expect a battle until price moved beyond $572. Once above this level it should move more easily to $575 and higher. Overnight expect the bulls to attempt a retest of $570 which likely fails on the next test with the market retracing to $567. The bulls will have the edge as long as price remains above $565. Should $565 fail the market will sell off once again and work its way back toward the low of the range at $550. The bears still control the market but the bulls now have the short term edge after three green days. $572 must be reclaimed for the bulls to seize more control from the bears. 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. SPY remains below the 200 DMA at $570 and until it is reclaimed, the bears remain in control.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Ranging Market State, with price closing mid-range implying a state of confusion whether today’s short squeeze has legs into tomorrow. Overnight the MSI remained in a very narrow bearish trend but ceased printing extended targets. This led to price rallying to MSI resistance at $565 as forecast which held until FOMC was released at 2 pm ET. There were no extended targets above or below prior to the release meaning price would go either way. And sure enough after a flash lower, price shot higher and the MSI rescaled higher several times, printing extended targets the entire time, forecasting price would rise to major resistance at $570. One there extended targets stopped printing and price fell with the MSI rescaling to its current ranging state. MSI resistance is currently $569.20 and support is at $566.41.  
Key Levels and Market Movements:
We stated Tuesday, “our general lean for tomorrow is SPY will attempt to back test a bit higher to $565 and if this fails to contain price, SPY will move toward $570 and the 200 DMA”. We also said “FOMC days can be quite volatile and often the first move after the report is a trap which should be faded”. Finally we stated, “Failed breakouts and failed breakdowns are reliable triggers to entry from major levels”. With this plan in hand and with price resting at major support in the premarket at $560, we entered long just above the premarket $560.50 support level looking for price to back test $565. That came fairly quickly and because it was against the overall bear controlled market and therefore counter trend, we took all profits at this level given we expected nothing but chop after 11 am leading up to FOMC. Flat heading into FOMC, we waited for price to show its hand, looking to fade the first move on a failed pattern to trigger an entry. SPY set up a textbook failed breakdown right at 2 pm which we knew to fade according to our plan. We were long at $564 with a stop below $562. With the MSI still in an extremely narrow range we decided to wait for it to rescale to help us identify a first target. By 2:30 pm the MSI rescaled and gave us a target at $567.25 where we took off 70% of our trade. We held our runners given the MSI was printing extended targets above, thinking $570 was achievable, again following our plan to the letter. Sure enough price hit $570 so we took off the remainder of our long position knowing the market would have an extremely hard time moving beyond $570. Once again SPY presented a textbook failed breakout and without extended targets above, we went short at $570 looking for a first target just a bit lower at $569. That came quickly and we moved our stop to breakeven and looked for price to retest lower levels. The MSI rescaled to a ranging state so we decided to use MSI support at $566.41 as a target to exit. We didn’t quite reach this price but got close so we went flat just before 3:30 pm and called it a day. Two highly profitable trades and one scalp, ending the day solidly in the green. Easy money when you have a plan, stick to the plan, and use the MSI as your guide. The MSI continues to display who controls the market, when and where they took control, providing targets for our exits. When combined with our model’s levels and the daily trading plan, we almost always end the day 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:
Thursday has no economic news to speak of except Unemployment Claims. At some point this number will move the market but we do not expect it to do so tomorrow. Therefore tomorrow, after three days of relief rally, we expect the market to take a break and pause before moving materially one way or the other. Its likely price attempts once again to break the 200 DMA but our model projects this next attempt will fail and price will work its way back toward $565. As long as $565 holds the bulls will make another push to break $570 and on subsequent tests of this level, it will give way. But moves above this level will be slow and difficult until the bulls reclaim $572. Above $572 there is clear sailing to $575. But between $570 to $572, the market will take time to absorb all the liquidity at these levels. At the other end, a failure by the bulls to hold $565 and the market moves to retest the lower end of the range at $550. Therefore our general lean for tomorrow is SPY will attempt to back test the 200 DMA and fail initially, falling to $565. If this level fails, SPY will move toward $550. But should price move above $570, the squeeze will be on and price will eventually work its way to $575. Watch the MSI closely and be careful to trade with the trend on a break above $570. With a consolidation day, failed breakouts and failed breakdowns are reliable triggers to entry from our major levels. Our model continues to forecast rallies will be sold until price reclaims $585 OR until the trade wars are suspended. Therefore until these macro issues are resolved, favor the bears, selling rallies to as high at $575. But 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 $570 to $580 and higher strike Calls while buying $568 and to $569 Calls and also selling $565 and $566 Puts. This implies the Dealer’s belief that prices may continue to rise on Thursday given Dealers do not sell close to the money Puts unless they are confident prices will rise. That said, they are not selling major quantities of Puts so while this is relevant, perhaps weigh it less than other information provided. To the downside Dealers are buying $564 to $540 and lower strike Puts in a 3:1 ratio to the Calls/Puts they are selling/buying, implying a slightly bearish posture for Thursday. This positioning is unchanged from today.  
Looking Ahead to Friday:
Dealers are selling $579 to $590 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 $571 to $574 Calls, which are solidly profitable at this point. It appears Dealers still believe price will resume higher by the end of the week. To the downside, Dealers are buying $567 to $530 and lower strike Puts in a 2:1 ratio to the Calls they are selling/buying, reflecting a neutral to slightly bearish view for the week. Dealer positioning has changed from slightly bullish to neutral/slightly bearish. Dealers have amassed large quantities of both much lower strike Puts and near the money Calls. This positioning tells us Dealers believe prices may move higher this week, but they are also prepared for any price decline, adding very inexpensive far OTM Puts. With so many Calls in the bank, Dealers are displaying optimism as we head into Friday. 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 Thursday is to expect consolidating price action as the market decides what will happen at the 200 DMA. Two way trading if favored and just like every recent day, 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. Trading in normal size is advised, adjusting to current conditions, being prepared to trade what you see and trading 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. Trading from the “edges” using our favorite failed breakout and failed breakdown patterns will put you in trades with lower risk and higher odds of success. The bears remain in control until $570 is reclaimed while above $570, the bulls will have the edge pushing price to $575. But $585 still needs to be reclaimed for the bulls to take control away from the bears. A failure to move above $570 and rallies will continue to be sold. A break below $565 will likely lead to a test of $550, while a break of $550 will see price visiting 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!