Market Insights: Thursday, March 20th, 2025
Market Overview
Stocks struggled on Thursday, failing to extend the prior session’s gains as the market digested the Federal Reserve’s stance on interest rates and economic growth. The Nasdaq Composite slipped 0.3%, the S&P 500 lost 0.2%, and the Dow Jones Industrial Average ended just below the flat line. Markets initially attempted to push higher but ultimately lost steam, as investors reassessed the Fed’s outlook, which included a higher inflation forecast and slower economic growth projections.
The Fed's decision to keep rates unchanged was widely expected, and the market had initially rallied on relief that two rate cuts remained in the forecast. However, concerns over potential economic softness and the impact of tariff-driven inflation weighed on sentiment. Fed Chair Jerome Powell reassured investors that inflationary pressures from tariffs would likely be transitory, but the market appeared skeptical as traders weighed the possibility that prolonged tight monetary conditions could still pressure equities.
Meanwhile, President Trump took to social media late Wednesday, calling for the Fed to cut rates, arguing that tariffs were already easing inflation. His comments injected some uncertainty into the market, though investors remain focused on macroeconomic data and corporate earnings for further direction. Despite the day’s pullback, key technical levels remain intact, and traders are watching closely to see whether stocks can reclaim lost ground or if further downside is ahead.
SPY Performance
SPY closed at $565.60, down 0.27% on the day, after opening at $563.21 and trading in a range between $562.60 and $570.56. Volume came in at 54.15 million shares, about average, reflecting active trading interest. The ETF briefly tested the 200-day moving average but failed to hold above it, leading to an afternoon fade. While the broader trend remains constructive, SPY will need to reclaim $570 decisively to sustain a bullish breakout.
Major Indices Performance
The broader market saw a mixed session, with small losses across major indices. The Russell 2000 underperformed, falling 0.63%, as small-cap stocks lagged. The Nasdaq Composite declined 0.33%, weighed down by profit-taking in tech stocks after Wednesday’s rally. The S&P 500 slipped 0.2%, while the Dow Jones Industrial Average was nearly flat, down just 0.03%.
Sector performance was mixed, with energy stocks providing some support as crude oil prices climbed over 2%. Defensive sectors such as healthcare and utilities held steady, while technology and consumer discretionary stocks faced moderate selling pressure. The market’s inability to build on Wednesday’s gains suggests some hesitation among traders, though key technical levels remain in focus for potential moves ahead.
Notable Stock Movements
The "Magnificent Seven" stocks had a mixed day, with Tesla, Meta, and Nvidia managing slight gains while the rest of the group ended lower. Tesla extended its recent rebound, supported by continued investor optimism after Wednesday’s upgrade. Nvidia saw a small recovery following earlier weakness tied to AI event expectations. Meanwhile, Apple, Microsoft, and Google-parent Alphabet declined marginally, as the broader tech sector cooled off.
Investor sentiment remains cautious toward growth stocks, as concerns over interest rates and macroeconomic trends persist. The next major catalyst for these names will likely come from earnings reports in the coming weeks, with traders closely watching for forward guidance.
Commodity and Cryptocurrency Updates
Crude oil rallied 2.09% to settle at $68.31 per barrel, bolstered by supply concerns and geopolitical tensions. Our model still projects a lower move toward $60, barring a significant disruption. Gold rose 0.38% to $3,052 per ounce, continuing its steady climb as investors seek safe-haven assets amid macroeconomic uncertainties. While gold’s performance has been stellar, the rally is long in the tooth and our model is forecasting a likely pullback before the precious metal moves beyond $3100.
Bitcoin pulled back 0.99%, closing just above $84,500. Despite the dip, we remain buyers of Bitcoin in the $83,000 to $77,000 range as a trading vehicle, with profit targets set at $85,000. The crypto market remains volatile, and traders should watch for key levels in the days ahead.
Treasury Yield Information
The 10-year Treasury yield declined by 0.42% to 4.238%, continuing its retreat from the 4.5% level that could trigger renewed equity selling pressure. Yields remain a crucial factor for market sentiment, as a move back toward 5% would likely lead to broader risk-off positioning. For now, the bond market suggests cautious optimism that the Fed will maintain its dovish stance on rate cuts later this year.
Previous Day’s Forecast Analysis
Wednesday’s forecast outlined a trading range between $563 and $573 for SPY, with resistance at $570, $572, and $575, while support was identified at $565, $563, and $560. The analysis anticipated that as long as SPY held above $565, it could attempt to test $570 and potentially push higher. However, a failure to maintain levels above $565 would likely result in downside momentum toward $560.
Given the lack of major economic catalysts, traders were advised to expect a choppy session with a focus on technical levels. The forecast also noted the significance of the 200-day moving average, suggesting that any sustained break above or below this level could dictate market direction.
Market Performance vs. Forecast
SPY’s actual trading range on Thursday closely mirrored our expectations, with a high of $570.56 and a low of $562.60. The ETF initially moved higher, testing key resistance at $570, but ultimately failed to hold gains, retreating toward $565 by the close.
The anticipated two-way action played out, as traders capitalized on both long and short setups at major levels. The failure to sustain momentum above $570 aligned with our projection that resistance in this area would prove difficult to clear. Meanwhile, the $565 support level provided some stability, reinforcing the importance of trading around key levels.
Premarket Analysis Summary
In Thursday’s premarket analysis, posted at 8:32 AM ET, the primary bias level was identified at $566, with upside targets at $569.50 and $572. On the downside, key support was noted at $564, $560, and $558. The analysis suggested that holding above $566 would favor long trades, while a rejection of this level would indicate a move lower.
The expectation was for choppy price action, with a preference for short trades if resistance levels held firm. The report also warned that if SPY failed to maintain footing above $564, downside pressure could accelerate toward $560.
Validation of the Analysis
The premarket analysis was largely accurate, as SPY tested $566 early in the session but struggled to maintain momentum above this level. The ETF briefly reached $570.56 before fading back toward the $565 region, confirming resistance at $570 and the importance of $565 as a key level.
Traders who followed the premarket guidance had opportunities to capitalize on both long and short trades, particularly around the projected bias and resistance zones. The market’s response to technical levels reinforced the value of the premarket framework in guiding trading decisions.
Looking Ahead
With no major economic releases scheduled for Friday, markets may continue to trade within a defined range unless unexpected news catalysts emerge. Next week, PMI data on Monday will be closely watched for further insights into economic momentum.
Market Sentiment and Key Levels
SPY remains in a tight range between $560 and $570, with a battle for control at the 200-day moving average. Bulls need to clear $570 decisively to gain further upside traction, with resistance at $571 and $573. On the downside, key support is at $565, $564, and $560, with a break below this range likely leading to a test of $550.
Expected Price Action
Our AI model forecasts a trading range of $560 to $571 for Friday, implying continued choppy price action. Expect price to drift slightly higher overnight. If SPY holds above $565, another test of $570 and possibly $571 is expected. However, failure to sustain $565 could lead to a move back toward $560 and lower.
Trading Strategy
Long trades should be considered if SPY holds above $565, targeting $570 and $571. Shorts could be initiated on rejections at resistance, with downside targets at $564 and $560. The VIX remains elevated, signaling continued volatility, so traders should use disciplined stop-loss levels and adjust size accordingly.
Model’s Projected Range
Our model projects a maximum range for Friday between $558 and $574, with resistance at $568, $571, and $573, while support is found at $565, $564, and $560. Below $558, liquidity thins out, increasing the likelihood of a drop to $550 if selling pressure intensifies. Unemployment Claims had little impact on the market today, and no major economic releases are expected tomorrow to drive price action. However, Friday is Quad Witching, which typically brings volatility. While the lead-up to Quad Witching tends to be bullish, OPEX Friday itself is often bearish. Expect a choppy session as institutions rebalance their portfolios, with heightened potential for market traps.
The 200 DMA has contained price within a tight $560 to $570 range, and a significant wall of resistance stands between $570 and $575, creating a battleground until a decisive move beyond $575 occurs. A breakout above $575 would allow price to move more freely toward $580, while a break below $565 increases the probability of a move toward $560. Support between $565 and $560 remains material for tomorrow but is notably less liquid than the resistance above $570, making it more vulnerable to failure after multiple retests. Overnight action is likely to be choppy within this $560 to $570 range. Bulls may attempt another push toward $570 or slightly higher, but another rejection is likely, leading to a retracement back to $565. Liquidity at $570 remains too dense to be absorbed in the next attempt. Bulls maintain a slight edge as long as price holds above $565, but if $565 fails, the market is likely to sell off again toward the lower end of the range at $550. While bears maintain control of the broader market, bulls hold a short-term advantage. A reclaim of $571 would shift momentum further in their favor. SPY remains at the lower end of the bear trend channel that has been in place since the December highs, with room to move in either direction. This broad channel will likely continue to contain price for the next few weeks. SPY remains below the 200 DMA at $570, and until that level is reclaimed, 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 near the bottom of the range implying a state of confusion heading into tomorrow. Overnight the MSI remained in a ranging state, retesting the 200 DMA at $570 before selling off prior to the open. The MSI rescaled to a bearish state with extended targets below indicating the herd was participating in the sell off. By the open however price had stabilized at the lows. The MSI rescaled just after the open to its current, wide ranging state. Very briefly on a subsequent test of $570 the MSI rescaled to a bullish state but did not print extended targets implying a weak bull trend that quickly faded with price and the MSI returning to a wide ranging state. MSI resistance is currently $568.64 and support is at $565.23.
Key Levels and Market Movements:
We stated Wednesday, “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.” Additionally we stated, “As long as $565 holds the bulls will make another push to break $570” and “moves above this level will be slow and difficult until the bulls reclaim $572”. With our plan in hand and after the premarket sell off to $563, which was a major support level in yesterday’s newsletter, on a failed breakdown pattern two minutes before the open, and without any extended targets below, we went long, seeking a first target at MSI resistance at $564.75. This came quickly and the MSI rescaled to a wide ranging state. We don’t love trading in this state but our model’s next major level of resistance was $570 so we moved stops to breakeven and held our runners, seeking $570. Mid-morning we reached MSI resistance at $568.54 so we took off another 20% of our long position and held 10% for a test of the 200 DMA at $570. The MSI rescaled higher and gave us a final target of $570.59 which we happily took to close this monster trade. And while we could have been extremely happy calling it a day before 11 am, SPY set up another textbook failed breakout at $570 and so without extended targets above and a narrow MSI bullish state, we entered short from this major level looking for a retest of $565. Given $569.50 was also identified as a major level in the premarket report, we loaded the boat on this trade knowing the odds of success were higher than trades without this confluence. We took first profits on 70% of our position at MSI support at $568.64 and held 30% of our position to run to at least $565 which we had identified as a level the bulls would defend. Given the MSI was in a ranging state, we took off another 20% of our position at $565 which was also MSI support, holding the remaining 10% runner to see if price would fall further. While the MSI rescaled to a bearish state, there were no extended targets below and price only reached the midpoint of the MSI before reversing higher. At 3 pm ET we decided we had two great trades which were the equivalent of triple a typical day so we took off our remaining 10% at $565 and called it a day. When you have a plan, stick to the plan, and use the MSI as your guide, trading is fun, profitable and stress free. The MSI displays who controls the market, when and where they took control while providing levels of support and resistance for exits. When combined with our model’s levels and our 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:
Friday has no economic news but is Quad Witching which typically produces choppy, trap filled price action. Trading these days can be challenging for even the most experienced traders. We suggest one and done tomorrow and only on a failed pattern from our major levels. While its highly likely price attempts to break the 200 DMA once again, the sheer volume of liquidity resting between $570 and $571 will make it extremely difficult for the bulls to push through the 200 DMA. Much of this liquidity will expire tomorrow and perhaps next week, the bulls will have an easier go pushing price beyond the 200 DMA. And like yesterday, as long as $565 holds the bulls have a very slight edge on subsequent tests of $570. For tomorrow the bulls need to reclaim $571 to have any hope of moving price higher…unlikely from our perspective. Above $571 the door will be open to higher prices. 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 once again to back test the 200 DMA and likely fail, falling to $565. Should price move above $570/$571, 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 $571. Failed breakouts and failed breakdowns with two way trading continue to be reliable triggers to entry from our major levels. Be very careful not to overtrade tomorrow. Our model continues to forecast rallies will be sold until price reclaims $585 OR until the trade wars are suspended. Until these macro issues are resolved, favor the bears, selling rallies to as high at $571 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 $578 to $580 and higher strike Calls while buying $566 and to $577 Calls. This implies the Dealer’s desire to participate in any rally to as high as $580 on Friday. Dealers are no longer selling Puts. To the downside Dealers are buying $565 to $530 and lower strike Puts in a 2:1 ratio to the Calls they are selling/buying, implying a neutral posture for Friday. This positioning has changed from slightly bearish to neutral.
Looking Ahead to Next Friday:
Dealers are selling $566 to $590 and higher strike Calls while buying $582 Calls as well indicating the Dealers desire to participate in any rally next week should price break $582. This positioning does not display any confidence by the Dealers that prices will rise next week. But with Quad Witching this positioning is likely to change materially on Monday so we will be sure to update our assessment next week on Monday. To the downside, Dealers are buying $565 to $525 and lower strike Puts in massive quantities in a 4:1 ratio to the Calls they are selling/buying, reflecting a bearish view for next week. Dealer positioning has changed from neutral/slightly bearish to bearish. It’s very possible Dealers are preparing for the April 2nd tariffs anticipating the market may become more challenging the closer we get to this date. Given March 28th is the last day prior to the implementation of the April tariffs, Dealers are heavily protected from a flash much lower, even buying $475 and lower strike Puts in size. This is clearly crash protection. Our recommendation is to follow the Dealers’ lead and ensure any long book has protection heading into April. While our model sees prices in April moving higher, our model also sees a 20% correction on the horizon nearer to the end of Q2 as the results of these economic policies begin to be felt. 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
Tomorrow is Quad Witching, therefore our advice for Friday is to expect choppy, trap-filled price action making trading difficult even for experienced traders. Two way trading if favored. Remain alert and exercise caution given the continued, economically hostile policies coming out of the White House is causing the market to be highly reactive to any news, good or bad. It remains probable rallies will continue to be sold until price reclaims the 200 DMA at a minimum. With no economic news, we suggest a "one and done" approach, only entering on a failed pattern from our major levels. While SPY may attempt to break the 200 DMA again, the significant liquidity between $570-$571 makes a sustained move above it unlikely. A failure to hold $565 could send the market down to $550, while a break above $571 may trigger a squeeze toward $575. It’s best to contemplate counter trend trades only 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. $585 still needs to be reclaimed for the bulls to take control from the bears 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, currently the bears. Be sure to review the premarket analysis before 9 AM ET for the day’s updates.
Good luck and good trading!
