Market Insights: Tuesday, April 1st, 2025
Market Overview
Stocks closed mixed in a choppy session Tuesday as Wall Street held its breath ahead of President Trump’s “Liberation Day” announcement on sweeping reciprocal tariffs. The S&P 500 gained 0.4%, adding to Monday’s bounce, while the Nasdaq outperformed with a 0.87% rise. The Dow edged lower, slipping just under breakeven. All eyes remain fixed on Trump’s pending announcement, which could include blanket tariffs on all U.S. trading partners. Investors are grappling with the uncertainty, especially after weeks of mixed signals from the White House. Analysts now expect the U.S. effective tariff rate to reach levels not seen since the 1940s—creating additional headwinds for an economy already battling stubborn inflation and slowing growth. On the macro front, job openings hovered near a four-year low in February, hinting at cooling in the labor market. Meanwhile, fresh manufacturing data showed another contraction last month, with cost pressures accelerating amid supply chain disruptions and tariff threats. With markets still guessing what tomorrow brings, traders remain on edge and volatility remains elevated.
SPY Performance
SPY finished Tuesday higher by 0.30%, closing at $561.07 after opening at $557.42. The ETF hit an intraday high of $562.94 before dipping to a low of $553.68 early in the session. Volume was below average at 49.32 million shares, as many traders stepped back ahead of Wednesday’s major catalyst. The 7-point intraday swing reflected the day’s two-way action, but bulls ultimately reclaimed the $561 level—though SPY remains well beneath its 200-day moving average, keeping the broader trend in bear territory.
Major Indices Performance
The Nasdaq led the major averages with a 0.87% gain, boosted by strength in mega-cap tech names. The S&P 500 followed with a 0.4% rise, extending its rebound into a second straight session. The Russell 2000 was nearly flat, inching up just 0.01% as small caps continued to lag. The Dow was the day’s underperformer, slipping 0.03% as financials and cyclicals came under modest pressure. Despite today’s upward tilt in equities, anxiety over Wednesday’s tariff reveal and softening economic data left risk sentiment fragile. Sectors showed little conviction with mixed action across the board, and defensive plays like utilities held steady while growth-oriented areas saw selective buying.
Notable Stock Movements
It was a strong day for the Magnificent Seven, with Tesla pacing the group with a rally of over 3%, helping reverse some of its heavy year-to-date losses. The rest of the group generally followed suit, finishing in the green, with the lone exception being Netflix, which slipped slightly. Nvidia, Apple, Amazon, Microsoft, Alphabet, and Meta all participated in the rebound. While today’s strength helped offset recent losses, sentiment around Big Tech remains cautious ahead of potential macro disruptions from tariffs and inflationary pressures.
Commodity and Cryptocurrency Updates
Crude oil dipped 0.34% to settle at $71.24 as traders faded Monday’s spike linked to tariff speculation and Iranian sanction fears. Our model continues to expect oil to grind lower toward the $60 range barring a major geopolitical shock. Gold remained mostly unchanged, ticking down 0.03% to $3,151, as traders paused after recent safe-haven inflows. Meanwhile, Bitcoin surged 3.15%, closing above $85,000. With momentum reasserting itself, we remain long-only buyers between $77,000 and $83,000, targeting profits north of $85,000.
Treasury Yield Information
The 10-year Treasury yield slid 1.86% to close at 4.166%, deepening the recent retreat from the critical 4.5% threshold. The drop reflects a continued risk-off bid for bonds ahead of Wednesday’s tariff announcement. Yields under 4.5% provide some breathing room for equities, but markets remain highly sensitive to any policy developments. Should yields reverse course and spike higher again, equity pressure will likely return swiftly.
Previous Day’s Forecast Analysis
Monday’s forecast outlined a wide SPY trading range between $548 and $565, with a bearish bias holding below $565 and upside targets at $561, $565, and $567. Support was expected at $555, $553, and $550, with any break below $550 putting $547 and $545 in play. The model warned that bears controlled the broader tape unless $565 was reclaimed, and advised traders to focus on short setups beneath $561 and consider tactical longs only if key support held and price moved decisively higher.
Market Performance vs. Forecast
Tuesday’s session closely tracked the prior day’s projected roadmap. SPY opened at $557.42 and dipped to $553.68 in early trade, testing key support just under $555. That dip was aggressively bought, with price accelerating toward the $561 target and peaking at $562.94—right in line with the model’s upside zone. The failure to test the lower bounds below $550 signaled underlying bid strength, even as overall sentiment remains cautious. Short entries below resistance were challenging due to quick reversals, but long trades from $555 support delivered solid returns. The model’s projected range of $547.50 to $567 held firmly, offering traders multiple intraday opportunities.
Premarket Analysis Summary
In Tuesday’s premarket analysis posted at 8:17 AM, SPY was trading at $556.52 with a bias level clearly defined at $556. The forecast leaned slightly bullish provided SPY held above that threshold, targeting upside moves to $559, $562.50, and potentially $565. A breakdown below $556 without swift recovery was flagged as a signal to favor short entries down to $553 or $549. The model advised quick profit-taking on short trades and favored buying dips from support levels given the likelihood of recovery-led action in the run-up to the tariff event.
Validation of the Analysis
Tuesday’s price action offered a textbook validation of the premarket analysis. SPY held the bias level at $556 early on, briefly dipping below to test $553.68 before quickly reversing. That bounce played out as the model predicted, hitting the $559 and $562.50 targets, with a high of $562.94 nearly tagging the upper resistance. Long trades from support near $553–$555 performed well, especially for those taking profits near the higher end of the range. Traders who stayed nimble and followed the plan were rewarded with predictable levels and high-probability setups. Once again, the premarket analysis proved to be an effective roadmap.
Looking Ahead
Wednesday is shaping up to be the most consequential trading day of the week with the long-awaited tariff announcement due in the afternoon alongside the ADP Payrolls report. Markets are likely to remain rangebound early as traders avoid overexposure, but expect volatility to spike post-announcement. Tariff clarity could reset market direction in either way, while ADP payrolls may offer early insight into Friday’s critical jobs number. Traders should remain defensive until the post-tariff picture becomes clear.
Market Sentiment and Key Levels
SPY is currently trading around $561, still well beneath its 200-day moving average and within the lower range of a wide bearish trend channel dating back to December. Sentiment remains bearish overall, but with bulls showing short-term strength after holding key support near $553. Major resistance levels remain at $561, $565, and $568, with support levels marked at $555, $553, and $550. A move above $565 could tilt sentiment more bullishly, while failure to hold $555 would quickly shift momentum back to the bears with $550 and $547 coming into focus. Traders should watch for sharp reactions around these inflection points as the market digests economic and policy headlines.
Expected Price Action
Our AI model projects a wide trading range of $553 to $565 for Wednesday—actionable intelligence indicating likely choppy conditions with trending periods. The market leans bearish unless $565 is reclaimed. If SPY holds above $561 early, bulls could push toward $565 and even $568. However, if $555 gives way, expect swift downside to $550 and $547. Sustained movement above $568 opens the door to $570 and $575, but tariff-related volatility could abruptly reverse any move. If the market fails at resistance, expect a return to support, and vice versa. The looming tariff news is a major macro variable that could result in a $10 or more swing in either direction. Trade what you see—reacting to failed breakouts or breakdowns is the highest-probability play in this environment.
Trading Strategy
Traders should consider tactical long entries from support at $555 or $553 with upside targets at $561 and $565. If bulls can push above $565, a move to $568 or even $570 is on the table. Conversely, failed rallies at $561 or $565 offer short opportunities down to $555 and $550. If SPY breaks $550, downside targets extend to $547 and $545. The VIX remains elevated, reflecting a fragile and reactive market—indicating traders should trade smaller size and use wider stops. Short trades remain riskier given potential headline reversals, but can pay if resistance holds. Stay agile and manage risk around known levels, especially ahead of the high-impact tariff announcement.
Model’s Projected Range
Our model projects a maximum trading range for SPY from $547.50 to $569, indicating strong potential for trending action Wednesday. The market remains Put-dominated, reinforcing the bearish bias. SPY is currently trading around $560, with notable resistance levels at $561, $565, and $568, while support can be found at $555, $553, and $550. Support below $550 is limited but building; however, beneath $547 there’s little to prevent a drop to $545 or lower. Above $568, resistance extends toward $570, but once above that level, the door opens to a potential move to $575. SPY once again closed well below its 200-day moving average amid an inflation and tariff-driven selloff that offered little relief throughout the session. The critical level of $565 must be reclaimed by the bulls—without it, the bears remain firmly in control of the broader market. While SPY did not retest yesterday’s lows, it did dip below $555 intraday. That dip was bought, suggesting a temporary floor may be forming around that level. The April 2nd tariffs remain the primary market driver, and as we've said in recent days, “If markets can absorb these risks on April 2nd without breaking materially below $549, we expect a bullish drift higher, possibly into the end of Q2. If the March lows fail to hold, SPY could revisit levels not seen since August 2024.” SPY continues to trade in the lower end of a broad bearish trend channel that began in December. This channel allows for movement in both directions and is likely to contain price action in the near term. Momentum, for now, is firmly in the hands of the bears.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI is currently in a Bullish Trending Market State, with price closing just above MSI support. There are no extended targets printing above. The MSI range is average indicating a weakening bull trend. Overnight price retraced some of the prior day’s gains which saw the MSI rescale to a ranging state and then to a very narrow bearish state. By the open the MSI was in an extremely narrow bullish state without extended targets above. Price hit a wall at MSI resistance and fell with the MSI rescaling lower to a bearish state, briefly printing extended targets below. By 10:20 am however, extended targets stopped printing and SPY reversed with the MSI rescaling through a ranging state to a bullish state. The MSI then rescaled several times higher in rapid succession with extended targets above with the herd pushing prices to the day’s highs at 12:14 pm. Extended targets then stopped printing and price retraced and fell with the MSI rescaling lower to a ranging state. Price held MSI support in this state and price moved higher into the close with the MSI rescaling higher to its current Bullish Trending Market State. Currently MSI resistance is $562.86 and support is at $556.39.
Key Levels and Market Movements:
We stated Monday, “There is a fairly high probability, given the narrow MSI, that SPY will retrace some of today’s rise, testing $555 once again.” We also noted, “If this level holds, price may again attempt to move beyond $558 toward $565.” And finally, we said, “SPY will run into interference above $560.” These forecasts laid out the day’s trading plan, just as they do every day—and once again, our model nailed it. With this plan in hand, and expecting a retest of $555, we opened the day noting a very narrow bullish MSI with no extended targets above. When SPY showed a textbook failed breakout at 9:46 AM, we entered short at MSI resistance at $558, targeting $555. We hit our first target at MSI support as the MSI rescaled from a ranging to a bearish state. With 70% of our position banked, we set our sights on the next support level at $554.23, took another 20% off at that level, and moved our stop to breakeven. When a brief extended target printed, we considered the potential for further downside—but the weak, narrow MSI kept us cautious. Sure enough, SPY set up a textbook failed breakdown just above a premarket support level. We reversed long and rode price back up to MSI resistance at $557. As the MSI began rapidly rescaling higher and printing extended targets, we knew we were aligned with the herd and could expect higher prices. We held 30% of our position through the rally until the MSI’s pace of rescaling slowed. We took another 20% off at $561.50, with $562.50 in mind from the premarket report as a final target. SPY reached that level, and while we held the final 10% of our position to see if price would break higher, it instead printed a textbook failed breakout. With extended targets no longer printing, we reversed short, targeting MSI support at $560.50. Another quick profit on 70% of the position followed, and we moved our stop to breakeven to see how far price might fall. The MSI then shifted to a wide-ranging state—not our favorite—but we set our second target at MSI support at $556.50. Sure enough, we reached that level at 2:30 PM and held onto 10% to see if the day’s lows might be tested. Price didn’t move lower but did set up a weak failed breakdown. We likely held our final 10% runner a bit too long. Since MSI was in a ranging state, we chose not to go long again, preferring to lock in gains from three already highly profitable trades. We finally closed the last 10% at $558 and called it a day—banking solid profits across the board. This is what happens when you harness the power of a well-constructed trading plan, stick to it, and use the MSI and our model’s levels as your guide. The MSI shows us who controls the market, when and where they took control, and provides actionable support/resistance levels for precise entries and exits. Combined with our model’s levels and daily planning, it consistently keeps us on the right side of the market. The MSI delivers this level of precision day in and day out—helping traders avoid trouble, stay aligned with the dominant forces, and take profits with confidence. We strongly recommend incorporating the MSI into your trading arsenal. When paired with a solid plan, it can significantly enhance your long-term success.
Trading Strategy Based on MSI:
Tuesday brings ADP Employment numbers, and of course, the President speaks at 4 PM after the close regarding tariffs. The market continues to trade cautiously and erratically. Big up moves followed by big down moves = big confusion. Still, today offered excellent two-way trading from the edges in this indecisive market. We expect more of the same on Wednesday until there's greater clarity on tariffs. The market remains in a modest relief rally off the March lows. As long as $555 continues to hold, price has room to move higher toward $565. If $565 clears, the effects of a squeeze will begin to show, with bears closing positions and pushing price as high as $570. However, if $555 fails, the bears will likely attempt to drive price below yesterday’s lows, potentially opening the door to the August lows. Much of this action will likely come after 4 PM tomorrow as the market reacts to the Trump tariff plan. During the regular session, we expect more sideways movement than any meaningful push higher or lower. That setup favors two-way trading from the edges—shorts from $560 to $565 and longs from $555 or slightly below. Below $555, we would wait for a test of $549 before considering new longs. The bears remain firmly in control, and rallies will likely continue to be sold. Without a fresh catalyst, our model sees SPY testing the day’s highs but failing to break materially higher, staying in a range between $558 and $563. We expect consolidation to dominate the afternoon session Wednesday as the tariff announcement approaches. Our general lean remains to sell all rallies until $565 is reclaimed. However, if the market digests tomorrow’s news without breaking below yesterday’s lows, our model expects 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 $561 to $575 and higher strike Calls. This indicates the Dealers’ belief that prices will be contained on Wednesday to a fairly tight range. To the downside Dealers are buying $560 to $530 and lower strike Puts in a 3:1 ratio to the Calls they are selling, implying a bearish posture for Wednesday. This positioning has changed from slightly bullish to bearish. It appears Dealers are positioned for downside risk in case any news of tariffs leak before the 4 pm press conference.
Looking Ahead to Friday:
Dealers are selling $569 to $585 and higher strike Calls while buying $561 to $568 Calls indicating the Dealers desire to participate in any rally this week. There appears to be a ceiling to any optimism at $580. To the downside, Dealers are buying $560 to $525 and lower strike Puts in a 4:1 ratio to the Calls they are selling/buying, reflecting an increasingly bearish view for the week. Dealer positioning has changed from bearish to more bearish. Dealers continue to add to their downside protection in case the April 2nd tariffs pressure the market to move toward the August lows. We continue to recommend long books do the same. The trend for the model is for financial conditions to worsen as the results of the administration’s economic policies begin to be felt by businesses across the globe. This guidance continues to resonate even with today’s rally. 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 traded in a range between $555 and $560 for much of the day as it awaits tariff news. The bulls have had a slight edge for a couple of days but overall, have no real control over the market. The moves higher the last two days are nothing but a short squeeze which could fail at any moment. This favors selling rallies until a catalyst shifts the broader outlook. Keep an eye on major levels like $555 and $565. Below $550 the door opens for a deeper move—potentially toward $500. Above $565 and the bulls chip away at the bears control and SPY moves back toward $585. Our advice remains the same as yesterday: Short term, the market remains dangerous 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. In this environment, we recommend focusing on failed breakout or failed breakdown setups at key levels. These typically offer the best risk/reward, especially when confirmed by the MSI. 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!
