Market Insights: Friday, March 28th, 2025
Market Overview
Wall Street plunged Friday as fears of rising inflation and escalating trade tensions triggered a sharp risk-off move, culminating in one of the worst sessions of the year. The Dow Jones Industrial Average cratered over 700 points, down 1.69%, while the S&P 500 dropped 2%. The Nasdaq led the declines with a 2.7% slide, dragged lower by a tech rout that saw heavy selling in mega caps. The spark came from a hotter-than-expected PCE report showing core inflation rising 0.4% month-over-month and 2.8% year-over-year, dashing hopes of cooling price pressures. At the same time, the University of Michigan's consumer sentiment index collapsed to its lowest level since November 2022, reflecting growing anxiety over the economy, inflation, and labor market. President Trump fanned the flames with comments confirming his plan to "absolutely" enforce retaliatory tariffs on Canada, just days after levying new duties on foreign autos. Despite a “very good talk” with newly elected Canadian Prime Minister Mark Carney, there was no sign of compromise on the trade front. Stocks, which had entered the week hoping for a tariff reprieve, finished it deep in the red as reality set in. Fed Chair Jerome Powell's attempts to reassure markets were largely ignored, as more officials acknowledged the economy is heading into a fog with "zero visibility." The Atlanta Fed’s GDPNow forecast was slashed to a 2.8% contraction for Q1, underscoring the growing toll from tariffs and inflation. Bonds caught a bid on the selloff, with the 10-year yield dropping to 4.25%, its lowest level since January. As April 2 looms—the day reciprocal tariffs kick in—markets remain on edge.
SPY Performance
SPY dropped 2.00% on Friday, closing at $555.73 after opening at $565.50. The ETF hit a session high of $566.27 before plunging to a low of $555.07, breaking major support and extending the week's steep losses. Volume surged to 62.66 million shares, well above average, as traders reacted to hotter-than-expected inflation data and rising geopolitical tensions. Friday's breakdown below the key $565 level marked a shift in control decisively back to the bears. SPY now trades well below its 200-day moving average, and unless bulls can reclaim $560 quickly, the risk of a move toward the March lows near $549 grows more likely.
Major Indices Performance
The Nasdaq was the day’s biggest decliner, sinking 2.7% as tech names unraveled under the weight of macro pressures. The Russell 2000 followed with a 2.03% slide, while the S&P 500 shed 2.00% and the Dow dropped 1.69%, giving up more than 700 points. The tech and consumer discretionary sectors led the downside, with little help from defensives. The combination of stronger-than-expected inflation, cratering consumer sentiment, and renewed tariff fears left investors scrambling for cover. With April 2’s tariff implementation looming and economic indicators flashing warning signs, markets exited the week in full risk-off mode, ending near session lows.
Notable Stock Movements
It was a bloodbath for the Magnificent Seven, with Alphabet, Netflix, Amazon, and Meta each tumbling over 4% to lead the losses. The remaining names in the group also declined materially, confirming the broad weakness across Big Tech. There were no real safe havens in the group, with even typically resilient names like Apple and Microsoft closing deeply in the red. This synchronized selloff reflects a broader shift in sentiment as investors grow increasingly skittish about persistent inflation and the impact of Trump’s trade war. With tech leadership faltering, the market now lacks a clear sector to carry it higher.
Commodity and Cryptocurrency Updates
Crude oil slid 0.77% to $69.15, continuing its recent drift lower as economic concerns weighed on demand expectations. Our model still projects a move toward $60 barring a supply disruption. Gold gained 0.82% to close at $3,116, attracting safe-haven flows amid surging volatility and weak consumer confidence. Bitcoin took a sharper hit, dropping 4.08% to finish just above $83,700. While still within our long-only buy zone of $77,000–$83,000, the cryptocurrency is beginning to show signs of fatigue. We remain buyers in this range but caution that the recent break in risk assets may dampen near-term enthusiasm.
Treasury Yield Information
The 10-year Treasury yield dropped 2.82% to 4.244% on Friday as investors fled to safety following the inflation surprise and sharp equity selloff. This is the lowest yield print since January, reinforcing the risk-off nature of the day. Despite falling yields, equities couldn’t mount a recovery, highlighting how inflation and tariffs now dominate the narrative. With the key 4.5% level still comfortably above, the bond market suggests there’s more room for equities to fall before panic sets in. However, traders should continue monitoring yields closely—any rebound back toward 4.5% or higher could spark another leg lower for stocks.
Previous Day’s Forecast Analysis
Thursday’s newsletter forecasted a volatile session with a wide trading range between $560 and $575, driven by Friday’s PCE release. The model leaned bearish under $575, projecting downside targets at $565, $563, and $560, with $558 in play if momentum built. A break and hold above $573 was expected to trigger a rally to $575, but the base case remained that rallies would be sold. Traders were advised to favor short trades under $575 while staying nimble due to elevated volatility around the inflation data. Holding $565 was outlined as critical for bulls; a breakdown below that would hand control to the bears.
Market Performance vs. Forecast
Friday’s trading played out almost perfectly in line with the forecast, though the selling was even more severe than expected. SPY opened at $565.50, briefly touched $566.27, and then plunged, losing the vital $565 level early in the session. It bottomed at $555.07 and closed at $555.73, not only breaking through all downside targets ($565, $563, $560) but approaching the lower edge of the model’s projected range. The model’s bias level of $575 never came into play, as SPY failed to muster any rally. Traders who acted on the call to short below $565 found multiple high-probability setups as the selloff accelerated. The model’s warning of potential sharp downside proved extremely valuable in navigating one of the week’s most bearish sessions.
Premarket Analysis Summary
In Friday’s premarket analysis, posted at 8:36 AM, SPY was trading at $568.78 with a bias level of $565.90. The model anticipated continued bearish sentiment and suggested short entries near resistance, favoring downside targets of $567 and $566.50. A potential move up through $565.90 could have opened the door to $572, but the tone remained cautious with a warning that broader market conditions remained fragile. Early profit-taking was recommended, with the view that unless SPY could hold above the bias level, further downside was likely.
Validation of the Analysis
The premarket analysis nailed the tone and structure of the day. SPY failed to hold the $565.90 bias level and instead reversed quickly, slicing through downside targets at $567 and $566.50 within the opening hour. With inflation data and tariff headlines dominating, the day played out exactly as warned, with persistent selling and no sustainable bid. Traders who followed the model’s call to short rejections near resistance were rewarded with significant downside movement. The guidance to favor early exits was also spot-on, as bounces were quickly faded. Once again, the model proved its value by framing the session with precision.
Looking Ahead
Monday’s session is a blank slate on the economic calendar, offering a potential breather after Friday’s fireworks. But the calm may be deceptive, as Tuesday brings both PMI and ISM readings, which could reignite volatility. Friday’s PCE data already revealed sticky inflation, so any signs of slowing growth in next week’s releases could compound recession fears. Traders should expect more headline-driven trading tied to tariffs, especially with April 2’s implementation date around the corner. While Monday may be quieter, it’s likely just the eye of the storm.
Market Sentiment and Key Levels
SPY closed at $555.73, decisively beneath the key $565 level and deep below its 200-day moving average. Sentiment is now firmly bearish, with the bulls having lost control of the tape. Resistance sits at $560, $562, and $568, while support lies at $555, $550, and $547. If SPY breaks below $555, the next major test is the March 13th low at $549. A failure there could open the door to $545 or even $540. Bulls must reclaim $560 quickly to have a chance at halting the bleed, but with the tariff countdown ticking, downside pressure is mounting.
Expected Price Action
Our AI model projects a wide trading range of $547 to $568 for Monday, signaling elevated volatility and the likelihood of another trending session. The market carries a strong bearish bias below $565, with downside targets at $555, $550, and $547. Should $549 fail, expect accelerated selling into the $540s. On the upside, reclaiming $558 opens a path toward $562 and $568, but those levels remain distant unless sentiment improves dramatically. This is actionable intelligence: the bears control the market, and unless bulls reclaim key ground, the path of least resistance remains lower.
Trading Strategy
Traders should continue favoring short trades below $565, particularly if SPY fails to hold early strength. Look for entries near $557–$565 with downside targets at $555, $550, and $547. If SPY begins to stabilize above $560, tactical longs can be considered, but with tight stops and profits taken quickly near $562 or $568. The VIX rose again on Friday, reflecting heightened volatility. In this environment, smaller position sizes and wider stops are essential. Avoid overexposure—this is a market ruled by macro catalysts, and traders should remain highly reactive to price action near key levels, especially as tariff headlines and Tuesday's data loom.
Model’s Projected Range
Our model projects a wide maximum range of $545 to $567.75 for Monday. This wide range confirms we are likely to see trending price action continue. The market is Put-dominated, which supports the ongoing bearish tone SPY is currently trading around $555, with key resistance levels at $560, $562, and $568, and support at $555, $550, and $547. Below $545, support thins out considerably, increasing the risk of a decline toward $540 or lower. Above $560, resistance stretches to $570. SPY closed well below its 200-day moving average amid an inflation- and tariff-driven selloff that offered little relief throughout the session. The critical $565 level has broken, putting the bears firmly in control of the broader market. Bulls will need to reclaim $565 at a minimum to begin regaining control. Should the March 13th lows at $549 fail to hold, we expect bears to press the tape lower, first toward $547, and potentially below $545. The looming April 2nd tariffs continue to dominate the narrative and were the key driver behind today’s decline. Combined with PCE data showing elevated inflation, market sentiment remains fragile. That said, if the market can absorb the impact of April 2nd without breaking below $549, we expect a bullish drift to resume—possibly carrying 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 both directions but continues to contain price action near the lower end. Momentum remains firmly in the bears’ hands for now.
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 extended targets printing below. The MSI range is wide indicating a strong bear trend. Overnight price traded in a narrow range until the open with the MSI rescaling lower. By 6 am the MSI rescaled to a ranging state and with price trading around the $565 major level of support, it looked like the market may rally off this level toward $570 and MSI resistance. But once PCE was introduced at 8:30 am, the MSI rescaled to a bearish state and started printing extended targets below. By 10:30 am the MSI began a series of rapid rescalings lower with extended targets which saw price break the $565 major level, putting the bears firmly in charge. The MSI continued to rescale lower with a widening MSI range and with extended targets below all day, price simply bounced off MSI resistance into the close, closing below MSI resistance. Currently MSI resistance is $556.88 and higher at $560.38.
Key Levels and Market Movements:
We stated Thursday: “PCE release has the potential to move markets materially… with the power to swing SPY by $10 or more.” We also noted, “Our model sees mild overnight weakness, likely retesting the $565 level…. As long as SPY stays below $575, rallies are likely to be sold.” Finally, we added that if $565 were to “give way, we expect bears to press toward $560 and potentially $558. Below $558, the path opens for a deeper move toward $550.” With this plan in hand, just after the open, price tested and failed at MSI resistance and the premarket level of $569.50. We entered short, knowing our odds of reaching MSI support were just shy of 70%. We quickly hit our first target at $564.45, and with extended targets printing, we let the rest of the position run. As the MSI began printing extended targets and rescaling lower, we held our runners, looking for a second target at $558—a level clearly identified in our plan. Price reached that level by late morning, so we took a second target and moved our stop to breakeven, holding a 10% runner for lower prices. Just after noon, price broke below $558. Per our plan, this signaled even lower prices were likely. With extended targets printing and a wide MSI moving steadily lower, we held our final runner into the close, exiting at $555.50. One monster trade—starting with a small gain out of the gate, it turned into a huge profit and capped off a week of massive gains. This is the power of planning the day, sticking to the plan, and using the MSI and our model to guide us. The MSI shows us who controls the market, when and where they took control, and provides actionable support/resistance levels for entries and 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 delivers this kind of precision every single day—helping traders stay out of trouble, stay on the right side of the market, and take profits confidently. We highly recommend incorporating the MSI into your trading arsenal. When paired with a solid trading plan, it can significantly boost your long-term success.
Trading Strategy Based on MSI:
Monday brings no material news expected to move the market. It’s likely the bulls attempt a backtest of $558. If they fail to reclaim that level—and if today’s lows at $555 don’t hold—the market is headed toward the March 13th lows at $549. However, if the bulls can push price back above $558, we’ll likely see a move toward $560 and higher. That said, a lot can go wrong between now and Wednesday. The White House is set to release broad new tariffs on April 2nd, and as we said yesterday, every headline out of D.C. 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 and breaking today’s lows at $555. With the market closing at the lows, some follow-through is expected Monday. If the damage remains contained and price holds near $555, SPY can attempt a move back toward $558. A failure at $555, however, opens the door to $550 and potentially $547—breaking through the March 13th lows. The bears have taken full control from the bulls, and as such, our lean remains to sell all rallies until $565 is reclaimed. We're less inclined to trade both directions given the strength of the bear trend. That said, we’ll consider longs from $555 to $558 if $555 holds. A break below $555 shifts our focus strictly to short setups from resistance. We’ve been flagging tariff risk all week, and that risk remains front and center through at least April 2nd. If the market can digest April 2nd without breaking $549, 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 the MSI alongside our model levels to stay aligned with momentum. If you’re not already using these tools, reach out to your rep—they’re game changers in navigating this two-way environment.
Dealer Positioning Analysis
Summary of Current Dealer Positioning:
Dealers are selling $569 to $590 and higher strike Calls while buying $556 to $568 Calls. This indicates the Dealers’ desire to participate in any relief rally on Monday. To the downside Dealers are buying $555 to $525 and lower strike Puts in a 2:1 ratio to the Calls they are buying/selling, implying a neutral posture for Monday. This positioning has changed from slightly bearish to neutral.
Looking Ahead to Next Friday:
Dealers are selling $570 to $590 and higher strike Calls while buying $556 to $569 Calls indicating the Dealers desire to participate in any relief rally next week. There appears to be a ceiling to any optimism as high as $580. To the downside, Dealers are buying $555 to $530 and lower strike Puts in a 1:1 ratio to the Calls they are selling/buying, reflecting a neutral to slightly bullish view for next week. Dealer positioning has changed from bearish to neutral/slightly bullish. Dealers have added to their downside protection going into April 2nd and as we stated yesterday, “we highly recommend long books do the same.” Dealers continue to hold significant downside protection but it appears they think a test of the March lows may hold and price may attempt to rally in April. As we stated yesterday “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.” That guidance continues to resonate in the wake of today’s market pullback. 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 is in a tough spot, with the bulls having lost all control following the failure at $565. Neither the PCE report nor the University of Michigan Consumer Sentiment data did much to calm fears sparked by the upcoming April 2nd tariffs. As a result, the market remains a “sell-the-rallies” environment until something shifts the broader outlook. The March lows are just around the corner, and it wouldn’t surprise us to see them retested next week. If $550 fails, the door opens for a deeper move—potentially toward $500. In the short term, the market remains dangerous, particularly until we get clarity on the scope and impact of the new tariffs. Stay cautious: trade small, carry downside protection, and stay flexible. When unexpected catalysts hit, your edge comes from trading what’s in front of you. Until $565 is reclaimed, our bias remains to sell rallies. That said, we will consider longs from major support levels, provided price holds above $555. The bulls are no longer in control, so weakness should be leaned on—not bought blindly. In this environment, we recommend focusing on failed breakout or breakdown setups at key levels. These typically offer the best risk/reward, especially when confirmed by non-extended MSI readings. Counter-trend trades should only be considered when price is testing a critical level and broader conditions align. Stay nimble and disciplined. The bears may have the upper hand for now, but sentiment can shift quickly. Focus on trading from the edges, where risk is defined and probabilities improve. As always, review our premarket analysis before 9:00 AM ET for the latest levels and signals.
Good luck and good trading!
