Market Insights: Wednesday, April 2nd, 2025

Market Overview

Markets staged a strong comeback Wednesday as traders braced for President Trump’s long-awaited “Liberation Day” tariff announcement. After a rocky start that saw the S&P 500 and Nasdaq down over 1%, stocks reversed course as investors looked forward to clarity following weeks of trade policy uncertainty. The S&P 500 climbed nearly 0.7%, the Nasdaq rose about 0.9%, and the Dow added close to 0.6%—a gain of over 200 points. Tech names like Tesla and Amazon helped fuel the rebound. Tesla, down nearly 5% earlier after disappointing deliveries, surged more than 5% after a Politico report suggested Elon Musk may soon step down from his government role. Amazon gained 2% on reports it made a last-minute bid for TikTok.

The day’s main event was Trump’s tariff reveal, which finally ended the suspense. In a Rose Garden event, the president announced a sweeping new tariff regime including a baseline 10% tariff on all countries, with additional duties targeted at specific trade partners. China faces the highest rate at 34%, followed by the EU at 20%. Trump said the numbers reflect not just tariffs, but also non-tariff barriers he believes have unfairly disadvantaged the U.S. economy. Calling out a global list of "friend and foe," Trump emphasized that the new structure was about reciprocity and a level playing field.

While the announcement offered clarity, it also left markets digesting the potential for a new phase of global trade conflict. The 10-year Treasury yield inched higher to 4.19%, but still remained well below danger territory. Meanwhile, economic data added to the mix with ADP reporting stronger-than-expected private sector job growth for March, setting the stage for Friday’s all-important employment report. Despite the afternoon gains, investors remain cautious about how the global economy will respond to these tariffs in the days ahead.

SPY Performance

SPY rose 0.64% to close at $564.58 after opening at $555.25. The ETF hit a session high of $567.42 before dipping briefly to an intraday low of $554.83. Trading volume came in slightly above average at 51.21 million shares, reflecting heightened interest around the day's anticipated announcement. Despite the strong close, SPY remains well below its 200-day moving average and stuck in a longer-term bearish trend, though bulls found encouragement in the intraday rebound and close near session highs.

Major Indices Performance

The Russell 2000 led the charge with a 1.60% jump, showing renewed interest in small caps amid broad market strength. The Nasdaq added 0.87% behind strong tech momentum, followed closely by the S&P 500 which climbed 0.64%. The Dow gained 0.56%, lifted by a rally in industrials and consumer stocks, even as financials lagged. Markets initially traded lower but reversed course mid-session on hopes that Trump’s tariff announcement would bring some policy certainty. Sector performance was mixed with cyclical sectors seeing renewed buying interest, while defensive names like utilities took a breather.

Notable Stock Movements

Tesla led the Magnificent Seven with a surge of over 5%, bouncing back sharply from early losses tied to weak delivery data. Reports that Elon Musk may step away from his government role sparked a reversal that energized the stock. Amazon also saw a strong 2% move higher after reports emerged of a surprise bid for TikTok. Nvidia, Apple, and Netflix posted modest gains, while Meta, Microsoft, and Alphabet closed slightly in the red. Despite mixed performance, the group’s overall tone reflected cautious optimism as traders weighed growth opportunities against looming macro risks.

Commodity and Cryptocurrency Updates

Crude oil climbed 0.816% to settle at $71.80, continuing to react to geopolitical concerns, including Iranian sanctions and tariff-driven trade disruptions. However, our model continues to call for lower prices ahead, barring any major global shocks. Gold moved higher by 0.61% to $3,165 as investors continued to seek safety ahead of this week’s high-stakes macro events. Meanwhile, Bitcoin rallied 1.89%, finishing above $86,800. We continue to maintain a bullish stance on Bitcoin as a long-only trading vehicle in the $77,000–$83,000 zone, with upside targets remaining north of $85,000.

Treasury Yield Information

The 10-year Treasury yield edged up 0.53% to close at 4.178%, modestly reversing its recent slide. Yields remain safely below the 4.5% level that typically pressures equities, offering temporary breathing room to risk assets. However, markets remain on edge as any sustained rise above 4.5% could quickly reverse equity momentum, while a move toward 5% or beyond would likely trigger a deeper correction. With the new tariff structure now revealed, bond markets may soon recalibrate depending on how global economies react.

Previous Day’s Forecast Analysis

Tuesday’s forecast projected a wide SPY trading range between $553 and $565, leaning bearish unless the $565 resistance level was reclaimed. The model advised long setups from $555 or $553 support and short entries beneath resistance at $561 or $565. Upside targets included $561 and $565, while a break below $550 could open the door to $547 or $545. The model emphasized a highly reactive environment ahead of the tariff reveal, recommending short setups at resistance and quick profit-taking on breakdowns with limited downside follow-through expected prior to clarity.

Market Performance vs. Forecast

Wednesday’s action aligned closely with the model’s roadmap. SPY opened at $555.25 and briefly dipped to $554.83—just above key support—before surging toward the $565 resistance level, topping out at $567.42. The forecasted range of $553 to $565 held for most of the day before a late-session breakout pushed the ETF slightly above. Bullish trades from the $555 support delivered solid returns, while shorts around the $561-$565 zone required nimble exits as the market pivoted quickly higher. Overall, the model provided an effective blueprint, offering high-probability entries and exits across multiple levels.

Premarket Analysis Summary

In Wednesday’s premarket analysis posted at 7:52 AM, SPY was trading at $557.41 with a bias level identified at $560. The outlook favored downside pressure below that threshold with potential moves to $557 and $553. On the upside, holding above $560 could open the door to $562.50 and $563. The model leaned slightly bullish from support levels but maintained an overall cautious tone due to the pending tariff announcement. The forecast advised traders to sell rallies below $560 and buy dips near support, anticipating choppy price action and sharp reversals throughout the day.

Validation of the Analysis

Wednesday’s price action offered strong validation of the premarket outlook. SPY initially rejected the $560 bias level, dipping toward $555 before finding support and reversing. After the tariff announcement, SPY surged through resistance levels, hitting both the $562.50 and $563 upside targets, and briefly topping $567. The model's key levels provided clear trading signals, with long trades from support near $555 proving highly profitable. The reversal above $560 was a critical turning point that mirrored the model’s projections. Traders following the premarket roadmap had a strong edge in navigating the day’s volatility.

Looking Ahead

Thursday brings Unemployment Claims and the Services PMI, both of which will be closely watched following Wednesday’s tariff reveal. Markets are likely to be sensitive to any signs of labor market weakness or service sector contraction, particularly in light of today’s trade policy shock. These reports will also help set the tone heading into Friday’s all-important Jobs Report, which remains the biggest event of the week. Expect continued volatility as traders digest fresh economic data and assess its impact on future Fed policy and earnings expectations with tariffs likely to rock the markets materially.

Market Sentiment and Key Levels

SPY closed at $564.58, still trading beneath its 200-day moving average and locked inside a wide bearish trend channel dating back to December. Sentiment remains cautious with bears maintaining broader control, but bulls showed short-term strength by defending $555 support and pushing toward resistance. Key levels to watch include resistance at $555, $558, and $561. Support levels are now seen at $552, $550, and $548. A move above $565 could shift the tone more bullishly and invite a squeeze higher, while failure to hold $555 would likely reignite downside momentum with $552 and $548 coming into play. Tariffs are likely to make all these levels mute so Thursday its important to trade what you see.

Expected Price Action

Our AI model projects a trading range of $540 to $560 for Thursday, providing actionable intelligence that suggests potential trending action. The model leans bearish unless $565 is reclaimed and held. If SPY can sustain momentum above $565, the next resistance zones at $568 and $570 come into focus, with a breakout potentially leading to $574 or even $578.25. However, a failure at $565 or a break below $558 would likely send SPY back toward $552 or lower. The new tariffs are a wild card, and traders should expect heightened volatility as global markets respond. Trade only when key levels are confirmed, and watch for failed breakouts or breakdowns for the cleanest setups.

Trading Strategy

Traders should be very careful on Thursday and only trade with the trend that emerges after tariffs are announced. A failure of the weeks lows and price will work toward the August lows at $510. Long should not be considered in this scenario until price reached $540 or sets up a failed breakdown. Instead sell all rallies and find ways to get short on any failure of $549. While remote, a breakout above $568 could accelerate gains to $570 or higher. If SPY fails to hold above $558, shorts become viable with targets at $555, $552, and potentially $548. VIX remains elevated, signaling heightened risk and the need for smaller position sizing and wider stops. Stick to trades near known levels and stay alert for intraday reversals tied to macro events. With so much riding on the week’s remaining data, discipline is key.

Model’s Projected Range

The model’s maximum projected range spans from $526.50 to $578.25, with the Put side dominating. This massively expanding range points to trending price action ahead on Thursday. SPY closed at $564, but with a major tariff announcement still pending, tomorrow’s session could look materially different. Currently, key resistance levels are at $555, $558, and $561, while support sits at $552, $550, and $548. Below $546, support is sparse—opening the door to a much deeper decline. Above $558, there is resistance up to $560, but a break above $560 clears a path toward $570. SPY once again closed below its 200-day moving average amid an inflation- and tariff-driven selloff that offered little relief throughout the session. The $565 level remains critical for the bulls. Without a strong reclaim of this area, the bears maintain control over the broader market. SPY did hold $555 intraday, prompting a rally on hopes that tariffs would prove to be a nonevent. That dip-buying behavior briefly suggested a temporary floor at this level. However, those hopes were dashed after-hours as sweeping new tariffs were announced, sending prices lower once again. A break below $549 on this news opens the door to significantly lower price levels. If the market can absorb the tariff risks and stay above $549, price may attempt a drift higher into the end of Q2. But if the March lows give way, SPY could test levels not seen since August 2024. Currently, SPY trades near the lower end of a broad bearish trend channel that began in December. This channel allows for movement in both directions but is likely to contain price action in the near term. That said, momentum has clearly shifted back into the bears' hands—for now, they remain in control.

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 narrow bearish state. There were no extended targets below. By the open the MSI was in a ranging state which evolved to a Bullish Trending Market State by 10:30 am. Rescaling higher and printing extended targets above, the MSI rescaled higher once again with SPY reaching the day’s highs by 1 pm. Extended targets stopped printing and price found material resistance at $567 leading to a retracement of the gains with the MSI spending the rest of the afternoon between a wide ranging state and bullish state. Price closed just above MSI support in its current state while the market waits on news of tariffs. Currently MSI resistance is $567.12 and support is at $563.86. 
Key Levels and Market Movements:
On Tuesday, we stated, “today offered excellent two-way trading from the edges in this indecisive market. We expect more of the same on Wednesday.” We also noted, “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.” Finally, we outlined our preference for “shorts from $560 to $565 and longs from $555 or slightly below.” Three simple forecasts formed the foundation of our trading plan for the day. With that plan in hand—and expecting $555 to hold—combined with the MSI in a narrow bearish state and no extended targets in play, we went long at the open on a less-than-textbook failed breakdown at $555.50, anticipating a move toward $560. While we considered taking a first target slightly higher at $556.25, we typically avoid initial targets under $1, so we held the position. As the MSI rescaled to a ranging state, we identified MSI resistance at $560.50 as a strong first target and exited 70% of our position there. After 10 a.m., the MSI shifted into a bullish state, giving us confidence to aim for a second target at MSI resistance at $562.75—backed by a 70%+ probability of price reaching that level. With another 20% secured, we let the final 10% run, as extended targets began printing above. Sure enough, price broke out, and by 1:12 p.m., SPY had hit the day’s high. When extended targets stopped printing right at MSI resistance at $567, SPY set up a textbook failed breakout. Despite the bullish and slightly wide MSI range, the risk/reward looked favorable for a mean-reversion short from this level. We reversed short on the failed breakout and targeted $564—an MSI level—for our first exit. That target hit by 2 p.m. Given yesterday’s newsletter had highlighted likely chop in the afternoon, we consulted our model for a second target. The premarket had identified $563 as resistance-turned-support, so we took off another 20% there and held the final 10% to see if price would push lower. A double bottom formed around 3 p.m., and we closed our last 10% at $561.50, wrapping up two high-quality trades that padded the wallet nicely. This is what happens when you build a solid trading plan, follow it with discipline, and let the MSI and model levels guide your decisions. The MSI shows who controls the market, when they took control, and pinpoints actionable support and resistance for precise entries and exits. When combined with our model’s levels and daily plan, it consistently keeps us aligned with the dominant market forces. The MSI delivers this precision day in and day out—helping traders sidestep trouble, stay in sync with momentum, and take profits with confidence. We strongly recommend incorporating the MSI into your trading toolkit. When paired with a well-structured plan, it can meaningfully enhance your long-term success.
Trading Strategy Based on MSI:
Wednesday brings PMI and Unemployment Claims, but these are likely to pale in comparison to the market’s response to the latest round of tariffs. As we write, the market has already reacted sharply, with SPY testing the week’s lows. Should those levels fail to hold, a significant leg lower is likely. If Monday’s lows do hold, a muted relief rally may follow—but the probability of that outcome is low. Our model suggests that the post-market decline is just the beginning, with Thursday likely to bring new lows. The market was in a modest relief rally off the March lows coming into this news. But there’s little support below $548, making a drop to $546—and potentially $540—increasingly likely. Below that, the August low at $510 becomes a key magnet and target for bears. If, by some miracle, price reclaims $555, we could see another move toward $565. But barring that, the bears are firmly in control and poised to drive prices materially lower. This environment calls for traders to sell rallies and seek setups using the MSI and our model’s key levels. With many levels already breached, Thursday will be a “trade what you see” day—leaning heavily on the MSI for guidance. If extended targets are in play, sell into MSI resistance and ride to support—the odds of success are near 70% whenever this setup appears. Failed patterns are your best odds of success. We may consider longs from $540, but only on a clear failed breakdown. Until then, we favor shorts for Thursday. The bears are in control and likely to press even harder, with every rally being sold. Without a new catalyst to halt the decline, our model no longer expects a rally into the end of Q2. Instead, the probabilities now favor a move toward $510—or lower—before any reversal takes hold. Keep a close eye on the MSI. It continues to offer crucial insight and helps avoid fighting the dominant trend. Respect extended targets—they often signal strong herd behavior and powerful momentum. Use the MSI in tandem with our model levels to stay on the right side of the market. If you're not yet using these tools, reach out to your rep—they’re absolute game changers in navigating conditions like these.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling $565 to $580 and higher strike Calls. This indicates the Dealers’ belief that prices will remained contained on Thursday moving no higher than $570. To the downside Dealers are buying $564 to $530 and lower strike Puts in a 1:1 ratio to the Calls they are selling, implying a bullish posture for Thursday. This positioning has changed from bearish to bullish. But this positioning is misleading. If you look more closely you will see that Dealers are selling more Calls than Puts and the Calls they are selling are at the money. This implies Dealers believe prices will fall as a result of tariffs. This is why you must be careful when you interpret this type of information. On the surface more Calls means more bullish behavior. But not in this case…in this case Dealers are ready for downside risk in case tariffs are worse than expected, positioned to profit handsomely from any decline.    
Looking Ahead to Friday:
Dealers are actively selling Calls from $565 to $590 and beyond, signaling their belief that price will remain contained through Friday and is unlikely to exceed $580. On the downside, they are aggressively buying Puts from $564 all the way down to $525—and even lower—in a 3:1 ratio to the Calls they’re offloading. This reflects a decisively bearish outlook for the week. Dealer positioning has shifted from more bearish to outright bearish. The fact that so many of the Calls being sold are close to the money is telling—Dealers are clearly signaling they see limited upside and are preparing for further declines. Their purchase of deep OTM Puts down to $490 reinforces this view, as they hedge against a potential market collapse. Dealers continue to build downside protection, and we strongly recommend long books do the same. We've been emphasizing all week that our model points to worsening financial conditions. That trend continues to assert itself daily—and it’s increasingly likely that its full force will be felt on Thursday and Friday. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly, and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders

The market continued its relief rally early in the session, trading as high as $567. It looked like the door was opening for a move higher, with bulls eyeing a reclaim of $585 to shift control away from the bears. However, the tide quickly turned after the announcement of new tariffs. The market sold off sharply, breaking through the March lows and reinforcing the bearish outlook. With that break, all rallies should now be viewed as selling opportunities. The August lows near $510 are firmly in play, and a 20% decline from recent highs is a reasonable expectation given the growing global macro risks. The reality is that other nations are unlikely to sit back and accept the latest wave of tariffs without response. It’s increasingly likely that the trade wars are just beginning. Any escalation will weigh heavily on global GDP, drag down corporate earnings, and—by extension—push stock prices lower. If you haven’t already added downside protection, now is the time to do so. Looking ahead to Thursday, there is little to prevent price from falling to $540. While some short-term relief could emerge at that level, it will take time for institutional traders to recalibrate in light of the new macro landscape. For now, continue to sell rallies and avoid fighting the trend. The bulls must reclaim at least $555 for any shot at squeezing out bears shorting at current levels—but that scenario appears highly unlikely in the near term. We continue to recommend caution: 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 have the upper hand, 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!