Market Insights: Friday, March 7th, 2025

Market Overview

Stocks clawed back some losses on Friday as Wall Street ended a turbulent week dominated by trade policy uncertainty and economic data jitters. The S&P 500 rebounded 0.5% after posting its worst weekly performance since September, while the Nasdaq gained 0.7%, snapping out of correction territory after Thursday’s rout. The Dow Jones Industrial Average climbed 0.6%, reflecting cautious optimism among investors.

The February nonfarm payroll report revealed 151,000 new jobs added last month, slightly missing economists’ expectations of 160,000. The unemployment rate inched higher to 4.1%, reinforcing concerns about a cooling labor market. Traders continue to bet on eventual rate cuts despite Federal Reserve Chair Jerome Powell’s firm stance that the central bank is in no rush to adjust monetary policy. His comments, among the last before the Fed’s March 18-19 meeting, underscored the lingering uncertainty surrounding inflation and economic growth.

Trade tensions remain a significant overhang, with President Trump temporarily halting new tariffs on Mexican and Canadian goods. While Canada followed suit with a delay in its retaliatory measures, Mexico has yet to respond, keeping the geopolitical landscape unpredictable. Meanwhile, chip giant Broadcom offered a bright spot in tech, with its stock ticking higher after issuing a strong Q2 forecast, fueling some optimism about AI-driven demand despite recent sector-wide selling pressure.

SPY Performance

SPY opened Friday at $570.99 and briefly dipped to a session low of $565.63 before recovering to close at $575.84, up 0.55% on the day. The trading range remained wide, reflecting ongoing volatility as investors weighed the mixed jobs report against Powell’s commentary. Volume was elevated at 76.16 million shares, indicating heightened activity from both institutional and retail traders.

Major Indices Performance

The Nasdaq led Friday’s gains with a 0.85% advance, bouncing back from its steep Thursday losses. The S&P 500 followed with a 0.5% rise, while the Dow closed higher by 0.6%, buoyed by a rebound in key industrial and consumer stocks. The Russell 2000 lagged slightly, adding 0.33% as small caps struggled to recover amid broader economic concerns. Despite the day’s gains, all major indices posted a negative weekly performance, as uncertainty over trade policy and economic growth kept investors on edge.

Notable Stock Movements

The "Magnificent Seven" stocks saw mixed performance on Friday. Nvidia, Apple, and Alphabet led with gains, while Netflix suffered the steepest decline among the group. The broader tech sector saw some relief after Broadcom’s bullish earnings forecast, which tempered fears that AI demand may not be enough to offset macroeconomic headwinds. Despite the bounce, investor sentiment toward high-growth names remains fragile, with valuations under scrutiny amid a more challenging economic backdrop.

Commodity and Cryptocurrency Updates

Crude oil gained 1.02% to close at $67.04 per barrel, though our model still anticipates further downside toward $60 as global demand remains uncertain. Gold dipped 0.30% to $2,917 per ounce, reflecting a modest decline in safe-haven demand as the dollar steadied. Bitcoin plunged 3.83%, closing just above $86,000. Despite the pullback, we remain buyers in the $83,000 to $77,000 range, where support remains firm.

Treasury Yield Information

The 10-year Treasury yield inched up 0.40%, closing at 4.301%. While yields remain below the critical 4.5% threshold that typically pressures equities, any move above 4.8% would likely shift market sentiment sharply bearish. A breach of 5% could trigger a more substantial equity market correction, making Treasury yields a critical factor to watch in the coming weeks. The bond market is forecasting a recession this year which is defined by two quarters of negative GDP growth.

Previous Day’s Forecast Analysis

Thursday’s forecast projected a trading range between $565 and $585, with a bearish bias below $575. Resistance was expected at $578, while downside targets were set at $570 and $565. The analysis favored short trades while advising caution around potential volatility spikes driven by economic data releases. Long trades were also advised on dips below $570 if buyers defended major levels.

Market Performance vs. Forecast

Friday’s price action aligned well with the prior forecast. SPY opened at $570.99, tested key support at $565, and rebounded to close at $575.84—right in the middle of the projected range. The bias level of $575 acted as a pivotal point throughout the session, with multiple tests before buyers ultimately took control. Traders who followed the plan had strong opportunities to capitalize on dips toward $565 while locking in profits near resistance.

Premarket Analysis Summary

In Friday’s premarket analysis, posted at 7:35 AM ET, the model identified $575 as the bias level, with expectations for a relatively muted session unless a breakout above $575 or a breakdown below $570 occurred. Key support levels were set at $572, $570, and $567, while upside targets were placed at $575 and $580.

Validation of the Analysis

Friday’s market closely followed the premarket analysis. SPY remained near $575 for most of the session, testing support at $565 before bouncing back toward the bias level. The premarket targets of $570 and $575 were respected, reinforcing the accuracy of the forecasted range. This validation underscores the importance of our daily premarket insights in helping traders navigate market conditions effectively.

Looking Ahead

Next week brings key economic releases, including the JOLTS Job Openings report on Tuesday, followed by the CPI report on Wednesday and PPI on Thursday. With inflation data taking center stage, volatility is expected to remain elevated as traders assess the Fed’s next move. Friday’s University of Michigan Consumer Sentiment report will provide additional insights into consumer confidence, adding another layer of market-moving potential.

Market Sentiment and Key Levels

SPY closed at $575.84, with resistance now firmly set at $578, $580, and $585. Support stands at $575, $572, $570, and $565, with a failure to hold $565 opening the door to a retest of the August lows. Bulls must reclaim $585 to shift the narrative in their favor, while bears remain in control as long as SPY stays below this key threshold.

Expected Price Action

Actionable intelligence from our AI model forecasts a trading range between $565 and $585 for Monday, suggesting a choppy but tradable environment. The bias leans bearish below $575, with downside targets at $570 and $565. A break above $578 could trigger a short-covering rally toward $580 or even $585, but sustained upside remains unlikely unless macro uncertainties ease.

Trading Strategy

Long trades are favored on dips to $570 or lower on failed breakdowns, targeting $575 and $578. Short trades remain viable on failed rallies toward resistance, with downside targets at $572, $570, and $565. Given the ongoing volatility, traders should size positions accordingly and avoid overstaying trades, locking in profits quickly. With VIX elevated at 23+, risk management remains a top priority.

Model’s Projected Range

The model projects a maximum trading range between $564.50 and $586.75, reflecting a narrowing but still quite wide, Call-dominated market that implies consolidation with bursts of trending price action. Key levels to watch include $578, $580, $581, and $585 on the upside, with $575, $572, $570, and $565 serving as major support. The bears pushed prices to new weekly lows today but found major support at the lower trend channel in place from the December highs. Price bounced off $565 to end the day near where it opened at $575.92. SPY is at back to the 200 DMA which gave way in the morning session. A failure of $565 and price will work its way toward the August lows. The broader market remains under bearish control until SPY reclaims $585 at a minimum.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Bullish Trending Market State, with price just above MSI support. The MSI range is narrow without extended targets above, implying a weak bull trend. The MSI opened the day in a bearish state after the jobs report missed estimates. A brief test of $570 MSI support and price rallied to test $575 pushing the MSI to a ranging state before price gave way. The MSI rescaled lower several times in rapid succession with extended targets below confirming the herd was participating in the move lower. But extended targets were sporadic indicating a weakening commitment from the herd to lower prices. With a break of the 200 DMA, price found support at $565 and once extended targets ceased printing, price moved off MSI support at $565 with the MSI rescaling to a ranging state which then rescaled to a narrow bullish state at 2 pm ET. There were no extended targets above and with a narrow range, the MSI is implying a weak bull trend. MSI support is currently $574.45 and resistance is at $577.31.  
Key Levels and Market Movements:
We stated Thursday “that price will attempt to hold the 200 DMA at $570” and that “one more test which will hold” is likely. We also stated a “failure of $570 to hold and the market makes a major move lower”. Finally we stated, “the first two weeks of March are bullish so the markets are fighting history and at some point, it’s likely the bulls stage a significant relief rally”. Today all three of these statements were true and bore fruit. First the 200 DMA at $570 did hold, setting up a nice long at the open off MSI support. While not a perfect failed breakdown, the premarket price action after the jobs report provided a good enough set up for us to go long out of the gate to MSI resistance at $574 where we took first profits. We then looked to the premarket level of $575 for our second target and held 10% of our position to see if the bulls would attempt to stage a relief rally. This didn’t develop so on a retest and break of MSI resistance turned support at $574, we reversed short looking for MSI support as a first target. We got that quickly at $570 and moved our stop to breakeven looking to see if this level would hold again (we projected it would hold only one more time). The $570 level failed and the MSI rescaled lower, printing extended targets below. A fake out pop higher to MSI resistance and we reloaded our short to full size at $572.60 looking for a first target at MSI support at $568.50. That too came quickly so we took our target and continued to hold for lower levels, given the MSI was printing extended targets below and rescaling lower. The MSI then rescaled lower three times in rapid succession, but extended targets printed sporadically so we decided to take a second target at MSI support at $566.45. A failed breakdown just before noon had us thinking the bottom might be in. But with extended targets still printing, we held our runner to see if this major level and the lower trend channel would hold. By 12:15 pm ET with the MSI rescaling lower but without extended targets below, we decided to reverse long at MSI support with a very tight stop below $565. This proved to be a good move as some news of tariff relief hit the wire and price shot straight up. We said the bulls would stage a relief rally at some point and all they needed was an excuse to do so. We took first profits at MSI resistance at $570.50 and held for a second target for the premarket level of $575. Price reached this level next and with the MSI in a ranging state, we looked for an exit for our 10% runner. The MSI rescaled to a bullish state but to a very narrow bullish state with resistance much lower than the ranging state, so we exited at MSI resistance at $573.30 just after 2 pm and called it a day. All three statements, 1) the 200 DMA would hold one more time, 2) a break of $570 and price would move lower, and 3) a relief rally would come at any time, proved to be actionable and extremely profitable. We traded this intelligence four times today with four highly profitable, winning trades. If you had just taken any one of these today you would have had a good day. We had a great day and a great week, thanks to the MSI showing us who controls the market, when and where they took control while providing proper targets for our exits. When combined with our model’s levels and the trading plan we create each day, we more often than not end the day solidly in the green, and today was no exception. 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 no economic news to move the market. Absent external macro or news events that shake the market, we are in a market driven by tariff news so anything can happen. Our general lean for Monday is that SPY held the lower trend channel and the major $565 level, reclaiming the 200 DMA at the end of the day. SPY can attempt to build on today’s relief rally, moving toward $585. If $565 fails, the relief rally fails and its highly likely price moves toward $555 as its next stop lower. Our model is forecasting less volatility on Monday so there is a likelihood price at least pauses at the current levels to consolidate between $570 and $580. The market has not experienced this many daily 1%+ moves in over two years and continuing to do so will do real damage to the market. Powell stated the economy was in good shape so perhaps that alone is enough to calm the markets for a day or two. The MSI isn’t forecasting a very strong rally given how narrow the range is, therefore price will likely retest today’s lows at some point where we suspect it will bounce once again. We have discussed in past newsletters how support and resistance levels work. But for new readers, a major level will typically hold for two or three tests before weakening enough to no longer be valid. This is due to market participant absorbing the liquidity at that level. When liquidity is gone, the level no longer holds and price can move through it. This is the most basic mechanics of why our level to level trading works so well. The bears are in complete control of the market until price reclaims $585 at a minimum. $575 is the pivot between higher and lower prices in the current larger range of $585 to $565. Above $575 and the bulls will press for higher prices. Below $575 and the bears will head to retest $565. Therefore we favor short trades to as high as $585, but above $575 will seek failed breakouts as triggers to entry. We also favor long trades but only on failed breakdowns and only from our models major support levels. A break above $585 and the bulls will attempt to push price toward $590. Our model continues to forecasts rallies will be sold until price reclaims $600 OR until the trade wars are suspended. There are still major risks facing the market in March including the risk of a government shutdown and the debt ceiling debate, therefore rallies will likely be used as opportunities to lighten long positions. Until these macro issues are resolved, we continue to favor the bears, selling rallies to as high at $595. Above $595, there is a chance the bulls press price toward $600 so we do not favor shorts above $595. Again continue to seek failed breakouts or other topping patterns from major levels. 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 $576 to $600 and higher strike Calls. This implies Dealers believe the relief rally is likely to stall no higher than $585 on Monday. To the downside Dealers are buying $575 to $560 and lower strike Puts in a 2:1 ratio to the Calls they are selling, implying a neutral posture for Monday. This positioning has changed from slightly bullish to neutral. Dealers own major downside protection and continue to add to their Put protection with very far out of the money options in case the market unravels.  
Looking Ahead to Next Friday:
Dealers are selling $592 to $610 and higher strike Calls while buying $576 to $591 Calls indicating the Dealers desire to participate in any rally next week to as high as $600. Dealers do not seem to believe prices will exceed $600 by next Friday indicating a ceiling to any recovery that may develop. To the downside, Dealers are buying $575 to $540 and lower strike Puts in a 2:1 ratio to the Calls they are selling/buying, reflecting a neutral view for next week. Dealer positioning has changed from slightly bearish to neutral. Dealers have added significant downside protection at much lower levels, even as low as $480. This represents fear in Dealer positioning and is a new development which should not be overlooked. 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 Monday is to remain alert and exercise caution given the continued drama out of the White House. A weaker jobs number with rising unemployment is favorable to lower rates but bad for the economy. While Powell didn’t say much about tariffs except that the outcome of these is uncertain, he did state the economy continues to be on solid footing which may support the market for a couple of weeks. But the market is tenuous at best and rallies will be sold as institutions reduce exposure. We advise caution, adjusting to the current climate, being prepared to trade with the trend whenever possible, only contemplating counter trend trades when price is testing a major level and the MSI is not printing extended targets. Add a failed pattern and you will achieve the best results. This means two way trading from the “edges” using our favorite failed breakout and failed breakdown patterns. The bears have the edge over the bulls and $585 needs to be reclaimed for the bulls to have any chance of prices moving higher. A break above $585 will target $590 but $600 needs to be reclaimed for the bulls to take control away from the bears. A failure to move above $585 and price will continue lower toward $565 and a break of this level will lead to a test of the August lows. Stay nimble, continuing to monitor key levels seeking to initiate entries from our model’s major levels and with the controlling party which currently is the bears. Be sure to review the premarket analysis before 9 AM ET for the day’s updates.

Good luck and good trading!