Market Insights: Friday, March 21st, 2025
Market Overview
Stocks edged higher Friday as the S&P 500 and Nasdaq snapped a four-week losing streak, ending a volatile week that saw investors wrestle with mixed messages from the Federal Reserve and renewed trade tensions. The Dow Jones Industrial Average crept just above the flat line, the S&P 500 ticked up 0.1%, and the tech-heavy Nasdaq gained 0.5%. These moves marked a rebound from earlier in the session when all three indices were down nearly 1%.
The rally was fueled in part by a more upbeat tone from President Trump, who hinted at "flexibility" regarding the reciprocal tariffs set to go into effect on April 2nd. While not a policy reversal, his comments gave markets some breathing room amid concerns over escalating trade conflicts. Most of this week’s gains were sparked by Wednesday’s Fed meeting, where the central bank reaffirmed its plan for two rate cuts this year. Chair Jerome Powell soothed investors by saying the impact of the trade war appeared manageable and that the risk of recession remained low.
However, traders weren’t entirely convinced. Thursday saw renewed selling after digesting the Fed’s full message, which included projections for higher inflation and weaker economic growth. Earnings also played a role in sentiment, with FedEx and Nike both sliding Friday after signaling uncertainty tied to the macro environment. FedEx cut its 2025 outlook while Nike left questions unanswered regarding its turnaround efforts. Overall, while the week ended on a modestly positive note, caution continues to dominate the outlook.
SPY Performance
SPY closed the day at $563.98, down 0.27%, after opening at $559.12. It traded between a low of $558.03 and a high of $564.89, with volume picking up to 68.86 million shares—a bit higher than average for the ETF. Despite briefly reclaiming $564, SPY failed to test the 200-day moving average, finishing just below the key $565 level. The move suggests continued indecision as the ETF remains stuck in a narrow band between $560 and $570, with resistance proving hard to crack.
Major Indices Performance
The Nasdaq led the way with a 0.52% gain, buoyed by tech strength, followed by the Dow, which inched up 0.08%, and the S&P 500, up 0.1%. The Russell 2000 underperformed again, dropping 0.62% as small caps continue to struggle under pressure from high interest rates and economic uncertainty. Energy and financials were relatively flat, while tech regained some traction. Defensive sectors were mixed, with healthcare and utilities remaining mostly stable. The overall tone remained cautious, with limited conviction in either direction, typical of Quad Witching sessions.
Notable Stock Movements
Tesla surged more than 5%, leading the “Magnificent Seven” in a mostly green session for the group. Continued investor optimism and momentum helped drive the gains. Nvidia was the lone laggard, dipping slightly after its strong run earlier in the week. Apple, Microsoft, Alphabet, Amazon, and Meta all posted modest gains. The mixed performance reflects a broader market trying to balance cautious macro outlooks with resilience in key mega-cap names.
Commodity and Cryptocurrency Updates
Crude oil rose 0.35% to settle at $68.31 per barrel, holding near its recent highs amid lingering supply concerns, although our model continues to project a move toward $60 unless major disruptions occur. Gold slipped 0.52% to $3,028 per ounce, pausing its recent rally as risk sentiment stabilized slightly. 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.
In crypto, Bitcoin dipped 0.42% to close just above $84,100. Our model maintains a bullish stance on Bitcoin in the $83,000 to $77,000 zone with a near-term profit target at $85,000.
Treasury Yield Information
The 10-year Treasury yield rose slightly to 4.249%, up 0.38% on the day, reversing some of the prior session’s decline. While still below the danger zone of 4.5%, the uptick shows investors remain on edge about inflation and future Fed action. A move above 5% remains the line in the sand for a potential 20% or greater correction in equities, but for now, yields continue to hover near key resistance.
Previous Day’s Forecast Analysis
Thursday’s forecast projected a range between $560 and $571 for SPY with a slight bullish bias, favoring long trades above $565 and shorts on rejection at resistance. Resistance was identified at $570 and $571, while support was seen at $565, $564, and $560. The model anticipated another push toward $570, warning that resistance above would likely prove difficult to overcome. A break below $565 was expected to shift momentum back toward $560 or lower.
Traders were advised to look for failed breakout or breakdown patterns and avoid overtrading ahead of Quad Witching. The VIX was noted to be elevated, signaling increased volatility and the need for disciplined risk management throughout the day.
Market Performance vs. Forecast
SPY opened at $559.12 and traded in a range between $558.03 and $564.89, closing at $563.98, right at the lower end of the forecasted range. The price failed to reclaim and hold $565, confirming the bearish scenario laid out in the forecast. Resistance at $565 acted as a ceiling, with price fading after brief tests near this level.
The anticipated two-way action was present, as SPY fluctuated between key levels before ending the day just under resistance. Traders who followed the forecast had clear opportunities to take short trades on rejections near $564.75 and $565, with downside targets reached at $561 and $560. The model’s projected range held firm, underscoring the accuracy and value of the forecast in helping traders plan entries and exits around well-defined support and resistance zones.
Premarket Analysis Summary
In Friday’s premarket analysis, posted at 8:32 AM ET, SPY’s spot price was $562.78 with a key upside bias level identified at $564.75. Targets above were $566.75 and $569, while support was noted at $561, $560, and $557. The analysis suggested limited upside unless $564.75 could be breached and held, while favoring short trades on rejection at this level.
The market was expected to churn in the middle of the range due to Quad Witching, with any move beyond the key levels likely to be brief. The bias leaned bearish heading into next week, and the analysis warned of complex, sideways action that could frustrate directional traders.
Validation of the Analysis
The premarket forecast played out with high accuracy. SPY failed to hold above the $564.75 bias level, stalling near $564.89 before rolling over and closing under $565. The downside targets were in play, with price dipping to $558.03 before rebounding slightly into the close.
Traders had strong opportunities to initiate short positions near resistance, as the model suggested, and profit from the slide toward $561 and below. The sideways, choppy action was well anticipated, and the levels provided actionable guidance throughout the session. The analysis once again demonstrated its value in outlining precise risk and reward scenarios.
Looking Ahead
Looking to next week, Monday brings fresh PMI data, which could shed light on economic momentum and influence market direction. Tuesday and Wednesday are relatively quiet, with Thursday bringing GDP and jobless claims data, followed by the Fed’s preferred inflation metric, the PCE report, on Friday.
These upcoming releases could shift sentiment, especially with market expectations around rate cuts still fluid. Traders should remain focused on how SPY reacts to key levels in the absence of early-week catalysts and prepare for heightened volatility into the back half of the week.
Market Sentiment and Key Levels
SPY closed the session near $564, below the 200-day moving average, continuing its pattern of failure at resistance. The broader market remains rangebound between $560 and $570, with bulls unable to punch through the dense liquidity overhead. Bears maintain control of the broader trend, though the bulls are still trying to build momentum off the lower edge of the channel.
Key resistance sits at $566 and $570, with $575 acting as a breakout trigger above. Support levels are $562, $560, and the critical $555 zone. A breakdown below $555 would open the door to a retest of $550 or lower, while a move above $570 would offer a chance to challenge $575. Sentiment remains cautious with a slight edge to the bears unless the bulls reclaim the 200 DMA and sustain a move higher.
Expected Price Action
Our AI model forecasts a trading range of $558 to $570 for Monday, implying another session of choppy, rangebound movement unless external catalysts spark a breakout. The market bias is neutral-to-bearish, with a preference for short setups until resistance above $570 is convincingly cleared.
If SPY breaks and holds above $570, expect a move toward $575 and potentially $580. However, if support at $560 or $558 gives way, the next targets are $555 and then $550. Our model still sees price trapped within a consolidation channel, building energy for a potential larger move later next week.
This forecast is actionable intelligence, and traders should monitor how SPY behaves near the edges of this range. Failed breakout or breakdown patterns remain high-probability setups, especially near the $570 and $560 pivots. Volatility remains elevated, and trade war headlines could disrupt even the most technical setups.
Trading Strategy
For Monday, consider long trades only if SPY holds above $560 with upside targets at $566 and $570. Should SPY push through $570 and hold, traders can target $575 with tight stops as resistance above remains dense. Use failed breakdowns at support for entries.
On the downside, look for short trades on rejection at $566 or $570, targeting $560 and $558. Below $558, $555 becomes the next support zone, with a potential flush toward $550. Given ongoing trade tensions and macro headwinds, short trades carry a slight edge but should be managed with tight stops due to volatility.
VIX remains elevated, signaling that volatility is still high. Traders should use smaller position sizes and manage risk carefully, especially around major economic data. Avoid overexposure until the market establishes a clear direction.
Model’s Projected Range
Our model projects SPY to trade in a maximum range between $555 and $570 on Monday, in a narrow, Put-dominated range that suggests continued choppy action. The shrinking nature of this range implies consolidation, and the market is likely to remain bound within this tight corridor barring a catalyst.
Major resistance remains at $566, $570, and $575, while key support lies at $562, $560, and $555. There is little below $555 to keep price from falling to $550.
Today was Quad Witching which produced choppy conditions as forecast. Price ended just below $565, mid-range. The 200 DMA is keeping price contained in a narrow range between $560 and $570 with a wall of resistance above $570 to $575. Expect a battle until price moves beyond $575. Above $575 price will move more freely toward $580 while below $560 price will move toward $555. Our general lean is that the market will continue to trade within this large $560 to $570 range and as this fills out, will build energy for a breakout. Should price break and hold above $570, price can easily move to $575. But should $558 fail to hold, the market sells again to $555 and probably to a new, much deeper low. The bulls will likely continue attempts to break $570 or perhaps a bit higher, which again most likely fails until the market spends more time in this consolidation range. With April 2nd tariffs looming, the market could be in for a rough week, compounded by the fact that the last two weeks of March are typically bearish. If we get past April 2nd without new lows, we expect price to move higher and eventually reclaim the 200 DMA, which will support price into the end of Q2. The bulls have a slight edge as long as price remains above $565. Below $565 the bulls lose this edge. The bears still control the broader market, until the bulls reclaim the 200 DMA. 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 very narrow Bullish Trending Market State, with price closing above resistance turned support. There are extended targets printing above the MSI indicating a herd willing to push price higher. But with a very narrow to nonexistent MSI range, the trend is weak and its likely overnight and in the premarket on Sunday, price drifts toward the 200 DMA but does not break this level. Overnight the MSI rescaled to a bearish state with extended targets below indicating the herd was participating in the sell off. At the open these targets continued to print indicating a fairly strong bear trend. Just after noon the MSI stopped printing extended targets and price moved higher with the MSI rescaling to a ranging state. For most of the afternoon session and typical of quad witching, the MSI flipped flopped through all three states, printing extremely narrow ranges which led to nothing but choppy price action until just prior to the close. At 3:45 pm ET the MSI rescaled to its present bullish state and with extended targets above, price rallied into the close to our models major resistance level at $565. MSI support is currently $563.12 and higher at $563.38.
Key Levels and Market Movements:
We stated Thursday, “Quad Witching”…“typically produces choppy, trap filled price action.” We also stated, “We suggest one and done tomorrow and only on a failed pattern from our major levels.” With this plan in hand, given the market sell off premarket to the lows of the day at $558.00, a major level and the extent of the range for today, we knew to look for longs from this level on a failed breakdown. While we got the failed breakdown just prior to the open, we did not enter long at that time given extended targets were printing below the MSI. Instead knowing the pattern was valid, we waited for the MSI to stop printing extended targets which came at 10:54 am. We entered a counter trend trade long and looked for a first target at MSI resistance at $562. Price got close to our target but didn’t quite reach it. We got a bit nervous thinking this was a fake out and saw price quickly reverse to our entry at $560. Our stop was below the lows of the day so we continued to hold this trade. But extended targets started printing once again. Unwilling to risk capital on the market unraveling, we exited the long trade with a small loss, given extended targets should never be traded against. Price moved between $559 and $560 for another hour and finally just after noon, extended targets stopped printing, allowing us to reenter our long just above $560. We once again sought MSI resistance as a first target. We got there quickly and took off 70% of our trade at $562.50, putting us back in the green for the day. We then looked for a second target near MSI resistance at $564. Price wouldn’t cooperate and with the MSI bouncing around in very narrow ranges, we decided we had enough fun for quad witching and closed our remaining 30% at MSI resistance at $563.50 and called it a day. Our one and done was still one and done but with some complexities due to the choppy, trap filled price action that is typical of quad witching. There was little to nothing worth trading the rest of the day as forecast. The late rally was driven largely but favorable comments about tariffs being potentially delayed, but at that point we were done and enjoying our weekend. We ended the day with one solid trade and one small loss, but with a week without any other losses. The week was epic with monster trades virtually every day. By planning each day and sticking to the plan, using the MSI to guide us, with the MSI displaying who controls the market, when and where they took control while providing levels of support and resistance for exits, when we combine this 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:
Monday has PMI at 9:45 am which may move the markets materially. While our model is forecasting choppy price action, be sure to trade what you see after new information is released to the market. Absent this report and with the MSI in its current state, its highly likely price attempts to break the 200 DMA once again but fails. As long as $565 holds the bulls have a very slight edge on subsequent tests of $570. Below $565 this edge is gone. For Monday the bulls need to reclaim $570 to have any hope of moving price higher…unlikely from our perspective. Above $570 the door will be open to $575. A failure of the bulls to hold $565 and the market moves to retest the lower end of the range at $560 while a failure of $560 will retest today’s lows. And should those fail, we make new lows not seen in recent days. Therefore our general lean for Monday is SPY will attempt once again to back test the 200 DMA and likely fail, falling to $565. 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. Failed breakouts and failed breakdowns with two way trading continue to be 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. Until these macro issues are resolved, favor the bears, selling rallies to as high at $570 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 $564 and to $569 Calls. This implies the Dealer’s desire to participate in any rally to as high as $570 on Monday. It does not appear from Dealer positioning that they believe price will move beyond $570 on Monday. To the downside Dealers are buying $563 to $535 and lower strike Puts in a 2:1 ratio to the Calls they are selling/buying, implying a neutral posture for Monday. This positioning is unchanged from today staying neutral from neutral.
Looking Ahead to Next Friday:
Dealers are selling $564 to $590 and higher strike Calls while buying $582 Calls indicating the Dealers desire to participate in any rally next week should price break $582. This positioning does not display confidence by the Dealers that prices will rise next week. But given today was quad witching, this positioning is likely to change on Monday. To the downside, Dealers are buying $563 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 remains unchanged from today staying bearish from bearish. Dealers are perhaps preparing for the April 2nd tariffs anticipating the market may become more challenging the closer we get the implementation of these tariffs. Dealers are heavily protected from a flash much lower, even buying $475 and lower strike Puts in size. Our recommendation is to follow the Dealers’ lead, ensuring 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 near the end of Q2 as the results of the administration’s economic policies begin to be felt by businesses across the globe. 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
After a volatile Quad Witching session, SPY remains locked between key technical levels, with the 200 DMA continuing to act as a ceiling. Monday has PMI which may change the forecasted choppy, price action to a trending day. As such trade what you see. Absent this information, two way trading remains favored. Remain alert and exercise caution given the continued, economically hostile policies coming out of the White House. It remains probable rallies will be sold until price reclaims the 200 DMA at a minimum. In choppy conditions we suggest using a failed pattern from our major levels as triggers to entries. While SPY may attempt to break the 200 DMA again, a sustained move above it appears unlikely. A failure to hold $565 could send the market down to $560 and perhaps much lower, while a break above $570 may trigger a squeeze toward $575. It’s best to contemplate counter trend trades only when price is testing a major level and when the MSI is not printing extended targets. Using a failed pattern as a trigger to entry will produce the best results while trading from the “edges” 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!
