Market Insights: Thursday, March 27th, 2025
Market Overview
Markets slid for a second straight session Thursday as investors continued digesting President Trump’s auto tariff escalation and the threat of deeper trade friction with major allies. The S&P 500 and Dow each shed just over 0.3%, while the Nasdaq lagged with a 0.53% loss, dragged lower by renewed weakness in chipmakers. Sentiment soured after Trump signed an executive order formalizing a 25% tariff on foreign-made autos set to begin in April—coinciding with the start of retaliatory tariffs from key U.S. trading partners. The White House amped up the rhetoric, with Trump threatening even steeper penalties on the EU and Canada if they’re deemed to be acting against U.S. interests. General Motors sank 7% and Ford dropped nearly 4% on the news, while Tesla ticked higher as the least tariff-exposed U.S. automaker. Investors are growing anxious that aggressive tariff policies could amplify inflation while slowing growth, a mix that could nudge the economy closer to recession. In tech, chipmakers led another leg down with Nvidia, AMD, and Broadcom each losing ground amid concerns over demand and data center overcapacity. The Philadelphia Semiconductor Index dropped over 1.3% and is now down more than 11% year-to-date. All eyes now turn to Friday’s PCE data—the Fed’s preferred inflation metric—which could either soothe nerves or add fuel to the recent volatility.
SPY Performance
SPY drifted modestly lower Thursday, slipping 0.30% to close at $566.91 after opening at $567.18. The ETF traded as high as $570.90 early in the session but couldn’t hold gains, hitting a low of $564.94 before settling just above key support. Volume was lighter than average at 39.43 million shares, as the market appeared to pause after Wednesday’s sharper drop. Despite the modest decline, SPY remains below its 200-day moving average, and Thursday’s price action reinforced the importance of the $565 level as the line in the sand for bulls. Holding this level remains crucial for avoiding further technical deterioration heading into Friday’s inflation data.
Major Indices Performance
The Nasdaq led the declines again Thursday, losing 0.53% as continued chip weakness and tariff uncertainty weighed on growth names. The Russell 2000 followed with a 0.47% drop, while the Dow and S&P 500 slipped 0.37% and 0.30%, respectively. Sentiment remained cautious following the previous day’s tariff-driven pullback, with few signs of sustained dip buying. Sector-wise, tech continued to lag, while energy and gold-linked names saw minor strength. Defensive sectors offered limited support, suggesting traders remain risk-averse until Friday’s PCE report provides more clarity. With tariffs and inflation concerns both looming large, the broader market drifted cautiously, lacking conviction on either side.
Notable Stock Movements
Among the Magnificent Seven, Nvidia was the clear laggard, shedding over 2% as the selloff in AI and chip stocks deepened. Alphabet and Meta also slipped, continuing their recent slide. The rest of the group saw modest gains, but action remained muted overall. Tesla edged higher, likely benefiting from its lower exposure to auto import tariffs, while Microsoft and Apple saw small rebounds. The divergence reflects a market struggling to find leadership, with investors hesitant to buy tech ahead of Friday’s inflation data and amid persistent trade tensions. Momentum remains weak in the chip space, which continues to drag on broader tech sentiment.
Commodity and Cryptocurrency Updates
Crude oil inched up 0.27% to $69.84 but remains capped by macro uncertainty and weaker risk appetite. Our model still points to a drift lower toward $60 unless a fresh supply shock disrupts the current balance. Gold surged 1.47% to $3,097, catching a bid as investors sought safe haven exposure ahead of Friday’s inflation read and amid renewed global tensions. Meanwhile, Bitcoin slipped 0.29% but held firmly above $87,000. While off its recent highs, the cryptocurrency remains well above our preferred buy zone between $83,000 and $77,000, and we continue to favor tactical long trades with profit-taking above $85,000.
Treasury Yield Information
The 10-year Treasury yield ticked up 0.58% to close at 4.318%, as investors positioned ahead of Friday’s crucial PCE inflation report. Yields remain comfortably below the danger zone, but traders are watching the 4.5% level closely. A break above 4.8% would likely trigger renewed equity selling, while anything near 5% could catalyze a broader market correction. For now, the yield rise reflects caution rather than panic, with markets still absorbing the implications of Trump’s tariffs and their potential inflationary ripple effects.
Previous Day’s Forecast Analysis
Wednesday’s newsletter forecasted a wide and volatile session for SPY, projecting a trading range of $563 to $573 with a bearish bias. The model favored short trades below $573, targeting key support at $565, $560, and even $558 if selling intensified. Conversely, a break above $573 could have triggered a push back toward $576 and potentially $580. The bias levels to watch were $565 and $573, with the day’s direction expected to hinge on how SPY reacted at those levels. Traders were advised to lean bearish unless $573 was reclaimed, and to expect macro news—particularly tariffs—to dictate directional momentum.
Market Performance vs. Forecast
Thursday’s session largely validated the prior day’s bearish forecast. SPY opened just below $567 and briefly rallied to a high of $570.90, but it failed to reclaim $573—the critical pivot level—before fading lower to close at $566.91. This placed SPY within the projected range and just above the key support level of $565. While the day lacked the sharp follow-through selling seen Wednesday, the inability to break resistance confirmed the cautious tone. The model’s suggestion of favoring short setups below $573 again proved actionable, as early upside faded and sellers regained control. Traders who shorted near $570 or on rejection of $569 had clear opportunities to capture downside into the afternoon fade.
Premarket Analysis Summary
In Thursday’s premarket analysis, posted at 8:36 AM, SPY was trading at $568.78 with no strong directional bias. The model identified $569 as the key pivot, with upside targets at $570 and $571.50. On the downside, support was found at $567 and $566.50. The session was expected to be choppy with confused, back-and-forth movement driven by tariff concerns. Traders were advised to watch for acceptance or rejection of the $569 level to gauge potential direction. The tone was cautiously neutral, expecting more reaction to headlines than clean technical setups.
Validation of the Analysis
The premarket analysis again proved reliable, with SPY respecting the key $569 bias level early but failing to build on strength. After a brief morning rally to $570.90, SPY reversed lower, breaking through $567 and hitting a low of $564.94 before recovering slightly. The model's downside levels of $567 and $566.50 were reached, and rejection of $569 signaled the day’s weakness. Traders had solid short opportunities once the market rolled over below $569, especially as it failed to find follow-through above that level. The model accurately framed the day’s choppy but bearish tone, once again offering traders a valuable edge.
Looking Ahead
Friday’s session brings the long-anticipated PCE report—the Federal Reserve’s preferred inflation gauge. This is arguably the most important macro release of the week and could determine whether markets stabilize or sell off further into month-end. Strong inflation could reignite fears of prolonged rate hikes, while a softer print might offer relief and fuel a bounce. With tariffs already creating headwinds, this data may swing sentiment dramatically. Traders should expect elevated volatility and stay nimble, particularly around the 8:30 AM ET release. A strong or weak surprise could easily move SPY $10 or more in either direction.
Market Sentiment and Key Levels
SPY closed at $566.91, again beneath the 200-day moving average and below key resistance. Sentiment remains tilted bearish as the index hovers near the bottom of its recent trading range. Resistance is firm at $573, $575, and $580, while support sits at $567, $565, and $560. Bulls must hold $565 to have a shot at reclaiming higher levels. A move above $575 could trigger a retest of $580, but failure to hold $565 would likely open the door to deeper selling pressure and a possible test of $558. The current environment is fragile, and sentiment will pivot sharply based on Friday’s inflation numbers.
Expected Price Action
Our AI model projects a wider trading range of $560 to $575 for Friday, consistent with expectations of increased volatility tied to the PCE report. The market maintains a bearish bias below $575, with downside targets at $565, $563, and $560. If SPY fails to hold above $565, expect an acceleration lower toward $558. On the upside, a break and hold above $573 could invite a short-covering rally back toward $575. This is actionable intelligence: SPY is trapped in a fragile range, and Friday’s price action will be driven by inflation data and whether it relieves or reinforces recent concerns.
Trading Strategy
For Friday, we favor short trades below $575, particularly if SPY rejects that level following the PCE release. Look for initial downside targets at $565 and $563, with $560 and $558 in play if selling intensifies. If SPY can hold above $565 and regain $570, consider tactical long trades with upside targets at $573 and $575. The VIX has climbed slightly, indicating elevated volatility—making it essential to size positions conservatively and use wider stops. In this environment, the best trades often come from failed breakouts or breakdowns at major levels. Friday’s setup could shift rapidly on macro news, so flexibility is key. Trade what you see once this information is introduced to market participants.
Model’s Projected Range
Our model projects a wide maximum trading range of $561.75 to $576.50 for Friday, signaling a high likelihood of trending price action. The market is currently Call-dominated, hinting at a slightly bullish lean, but with limited conviction unless key resistance is broken. Resistance remains strong at $573, $575, and $580, while support is located at $567, $565, and $560. However, support below $560 is limited, increasing the risk of a decline toward $558 or lower. Above $570, there is significant resistance extending to $580. SPY closed below its 200-day moving average once again in a tariff-driven selloff that offered little relief throughout the session. If SPY can hold above $565, bulls may attempt to reclaim control and push toward $575 where its highly likely price stalls. But clearing $575 opens the door to higher levels. However, a failure to hold $565 also opens the door for a selloff to $560 and $558, where bears will likely intensify their efforts to drive prices below $550. Maintaining $565 is vital for bulls to sustain any momentum; losing it would hand control back to the bears decisively. The anticipation of the April 2nd tariffs continues to act as the key driver behind today’s decline. PCE data on Friday could move the market $10 or more either way. PCE is only second to FOMC for volatility. We’ve been cautioning that a negative reaction to tariffs might hit this week, and our guidance remains unchanged: if markets can absorb the April 2nd risk without breaking recent lows, we expect a bullish drift higher into the end of Q2. SPY is currently trading in the middle of a broad bearish trend channel that began in December. This channel allows for movement in either direction and is likely to contain price action in the near term. Should SPY reclaim $575, the bulls hold a meaningful advantage. Below that level, their position weakens and the bears have an equal chance of moving price lower. A breakdown under $565 shifts momentum firmly back into the hands of the bears. Watch for macro headlines to determine whether we see a breakout or breakdown.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI is currently in a Bearish Trending Market State, with price closing below support turned resistance. There are no extended targets printing below. The range is very narrow indicating a weak bear trend. Overnight price traded to and from MSI resistance and support in a bearish MSI state. After GDP was announced, price fell sharply and the MSI printed extended targets below. But price found support at the major $565 level, and reversed, trapping bears at the lows of the day. The MSI then entered a series of rapid rescalings higher to very narrow but strong bullish states which saw price move to $570 major resistance before the MSI stopped printing extended targets. This all occurred between 8:30 am and 11 am. The MSI then rescaled to a ranging state and bounced between a bearish and ranging state for the rest of the session. MSI resistance is currently $568.01 and higher at $568.73.
Key Levels and Market Movements:
We stated Wednesday “our model is forecasting a minor relief rally overnight”. Further we stated, “it’s likely that rallies will be sold as long as price remains below $573”. Finally we stated on any negative news, “a test of $565 becomes highly probable”. With this plan in hand, at the open price was already below $567 on the way to $565 and it was challenging to identify an entry quickly to catch the drop to today’s lows. As such we waited for the test of $565 to see if it would hold and if extended targets below would cease printing. At 9:48 am, price put in a textbook failed breakdown, trapping shorts at the lows. We entered long once extended targets stopped printing, looking for a first target at MSI resistance at $568. Price got there quickly and with 70% of our position in the bank, we looked for the next MSI resistance level at $570 for our second target. As we waited, the MSI began a series of rescalings higher. We contemplated reloading our long at $570 but decided not to do so given the MSI range was quite narrow and there were no extended targets above. We held our runners and decided we would not risk the profit we had already captured. Price reached our second target before 11 am and we took off another 20% of our position, leaving 10% to run toward MSI resistance at $570.50. Extended targets started printing so we held onto the 10% runner just in case price broke out higher toward $575. But at 11:22 am, extended targets stopped printing and with a double top at our model’s major resistance level as well as at MSI resistance, we reversed short with a tight stop just above $571.50. We caught this short perfectly and when the MSI rescaled to a ranging state, we decided to take a first target at MSI support at $568.75. Once at this level, the MSI rescaled lower to a very narrow bearish state without extended targets below. We decided to take another 20% off at MSI support at $568 leaving 10% to run. Price reversed pretty hard and with a stop at breakeven, we thought we might get stopped out on our 10% runner. But as the MSI entered a ranging state, the rally failed to gain traction and price fell back into the MSI bearish state. Our premarket had identified $566.50 as a major level so we decided if price reached this level, we would close our runner and call it a day. We got there at 1 pm and while SPY set up a pretty solid failed breakdown, we decided two for two with large gains was a good day in anyone’s book and wrapped it up for the session. The failed breakdown from the major premarket level did hold and others went long taking profits all the way to $570 once again. But we were done, two for two, adding to yesterday’s significant gains. This is made possible by planning the day, sticking to the plan, and using the MSI and our model to guide us. The MSI displays who controls the market, when and where they took control while providing levels of support and resistance for exits. When we combine the MSI 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 incorporating the MSI into your trading arsenal, combining it with our trading plan, to maximize your long-term success.
Trading Strategy Based on MSI:
Friday’s premarket PCE release has the potential to move markets materially—but tariffs remain the dominant force. Every headline out of the White House is effectively a PCE or FOMC print in disguise, with the power to swing SPY by $10 or more. Absent a fresh catalyst, our model sees mild overnight weakness, likely retesting the $565 level and entering Friday in a $565–$570 range. As long as SPY stays below $575, rallies are likely to be sold. A break above $575 flips momentum back to the bulls; until then, the bears maintain the edge. If negative tariff news hits, a break below $565 becomes increasingly likely. Should that level give way, we expect bears to press toward $560 and potentially $558. Below $558, the path opens for a deeper move toward $550. Holding $565 is critical—lose it, and the bears take firm control. Our lean for Friday: a modest drift lower within a tight $5 range. We continue to favor two-way trading, with a preference for selling strength below $575. A hold above $565 gives bulls a chance to retest $575; a breakout above that reopens upside momentum. We’ve flagged tariff risk all week, and that risk remains front and center. If markets can digest April 2nd without breaking recent lows, we still expect a bullish drift into the end of Q2. Keep a close eye on the MSI—it’s offering key signals. Avoid fighting extended targets; they often reflect strong herd participation. Use MSI and our model levels together to stay aligned with momentum. If you’re not already using these tools, reach out to your rep—they’re game changers for navigating this two-way environment.
Dealer Positioning Analysis
Summary of Current Dealer Positioning:
Dealers are selling $572 to $580 and higher strike Calls while buying $568 to $571 Calls. This indicates the Dealers’ desire to participate in any relief rally on Friday. To the downside Dealers are buying $567 to $525 and lower strike Puts in a 3:1 ratio to the Calls they are buying/selling, implying a slightly bearish posture for Friday. This positioning has changed from neutral to slightly bearish.
Looking Ahead to Next Friday:
Dealers are selling $573 to $600 and higher strike Calls while buying $568 to $572 Calls indicating the Dealers desire to participate in any relief rally next week. There appears to be a ceiling to any optimism to as high as $580. To the downside, Dealers are buying $567 to $525 and lower strike Puts 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 to bearish. Dealers seem to be adding to their downside protection going into April 2nd and we highly recommend long books do the same. The ratio has turned solidly bearish which implies a fear by the Dealers that prices may make new short term lows. While our model has been forecasting prices in April moving higher with a 20% correction near the end of Q2, the model is starting to modify the forecast with the first two weeks of April being bullish but the potential major market decline perhaps commencing much earlier than the end of Q2 original forecast. The longer out we forecast the less accurate so keep this in mind as you plan for the future. We do like to look at trends however and certainly the trend for the model is for worsening financial conditions 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
The market did little today as it prepares for PCE and the April 2nd tariffs. Back below the 200-day moving average (DMA) makes it more difficult for the bulls to reclaim that level. The market will likely take time to build energy within a fairly tight range unless an external catalyst push prices meaningfully higher or lower. As such our recommendation is to be flexible given when an unexpected catalyst hits, trade what’s in front of you. We still favor two-way trading, but we’re selling rallies until $575 is reclaimed. We will consider longs as well from major support as long as price remains above $565. The bulls lost their slight edge, so the edge now rests with the bears. Price may continue to chop around the 200 DMA as it builds energy for a decisive move. If $565 breaks, a move toward $550 becomes likely. In this environment, we recommend focusing on failed breakout or breakdown setups at key levels—these offer the best risk/reward, especially when confirmed by non-extended MSI readings. Counter-trend trades should only be considered when price tests a key level and supporting conditions align. Stay nimble and disciplined. The bears may have control for now, but that could shift quickly. Focus on trading from the edges, where risk is defined and odds improve. As always, review our premarket analysis before 9:00 AM ET for the latest levels and signals.
Good luck and good trading!
