Market Insights: Friday, February 14th, 2025

Market Overview

The Nasdaq 100 capped off its best week of 2025 on Friday, while the Dow and S&P 500 notched their third consecutive weekly gain. The major indices ended the session mixed, with the Nasdaq Composite rising 0.4% to close at a record high, while the S&P 500 edged slightly lower and the Dow slipped 0.3%. Investors digested a wave of economic data, including retail sales figures that fell short of expectations, adding to concerns about the strength of the consumer.

Retail sales dropped 0.9% in January, significantly below the 0.2% forecast, marking the largest monthly decline in a year. The weaker-than-expected data reinforced speculation that the Federal Reserve may need to adjust its interest rate outlook in the coming months. Meanwhile, markets also reacted to a busy week of policy shifts from President Trump, including a fresh round of tariffs on steel and aluminum, updates on Ukraine peace talks, and a review of CHIPS Act terms for semiconductor projects.

Despite Friday’s choppy trading, stocks maintained their bullish momentum, with investors encouraged by the White House’s decision to delay implementation of reciprocal tariffs. President Trump also suggested that new tariffs on automobiles could be announced by early April, keeping trade policy in focus.

Among the notable stock movers, Airbnb surged after reporting strong earnings, while GameStop gained on speculation about a potential move into Bitcoin. Moderna, on the other hand, slumped following a larger-than-expected earnings loss.

With the stock market closed on Monday for President’s Day, traders are now looking ahead to the next batch of economic reports, including the FOMC minutes and unemployment claims due on Wednesday.

SPY Performance

SPY closed Friday nearly flat, finishing at $609.75 after reaching an intraday high of $610.99 and a low of $609.07. Trading volume was significantly below average at just 24.11 million shares, reflecting a slowdown in activity ahead of the long weekend. Resistance at $610 remains intact, with $615 serving as the next potential upside target. Support levels remain at $606, $600, and $598.

Major Indices Performance

The Nasdaq Composite was the day’s best performer, rising 0.34% and securing a record-high close. The S&P 500 saw a marginal decline, while the Dow Jones Industrial Average fell 0.43%, weighed down by profit-taking after Thursday’s strong session. The Russell 2000 also slipped 0.08%, reflecting mixed sentiment in small-cap stocks.

Sector-wise, the tech-heavy Nasdaq continued to benefit from strength in Nvidia, Apple, and Meta. However, defensive stocks lagged as traders rotated out of safety plays. The broader market remains resilient despite concerns about economic growth, with investors maintaining a focus on earnings and geopolitical developments.

Notable Stock Movements

It was a relatively muted day for the "Magnificent Seven" stocks, with mixed performance across the group. Nvidia led the way higher, while Microsoft, Amazon, Alphabet, and Tesla ended in the red. Meta and Apple managed to hold onto small gains.

Airbnb was a standout performer, rallying on strong earnings that reinforced robust consumer demand for travel. Meanwhile, GameStop surged as rumors swirled about a possible expansion into cryptocurrency. On the downside, Moderna tumbled after reporting a larger-than-expected earnings loss, reflecting ongoing struggles in the post-pandemic vaccine market.

Commodity and Cryptocurrency Updates

Crude oil slid 0.88% to close at $70.67 per barrel, continuing its downtrend toward $60 as demand concerns persist. Gold fell sharply by 1.67% to settle at $2,896 per ounce, as traders rotated out of safe-haven assets.

Bitcoin edged up 0.49%, closing just above $96,700. The cryptocurrency remains in an uptrend, and we continue to favor buying opportunities between $83,000 and $77,000.

Treasury Yield Information

The 10-year Treasury yield declined 1.06% to finish at 4.477%, remaining below the key 4.5% threshold. If yields push back above 4.8%, equities could face renewed selling pressure, while a move above 5% would likely trigger broader market turmoil. The 5.2% level remains a key warning signal for a potential 20% market correction.

Previous Day’s Forecast Analysis

On Thursday, our AI model projected a trading range of $605 to $614 with a long bias. Resistance was identified at $610 and $614, while support was seen at $608, $606, and $604. The model suggested that SPY could push toward new highs if it remained above $610 but warned of potential consolidation if buyers failed to hold that level.

Market Performance vs. Forecast

SPY’s actual trading range of $609.07 to $610.99 was much tighter than anticipated, with the ETF failing to break cleanly above $610. The consolidation aligned with our forecast that resistance at $610 could hold firm. Traders who followed our guidance found limited but valid long opportunities as well as shorts from resistance, though overall market movement was more subdued than expected.

Premarket Analysis Summary

Friday’s premarket analysis, posted at 8:44 AM ET, projected resistance at $610, with upper targets at $613.50 and $615. The analysis suggested that a breakout above $610 could open the door to further gains, while failure to clear this level might lead to consolidation between $610 and $608.50.

Validation of the Analysis

The premarket analysis was highly accurate, as SPY hovered around $610 throughout the session but failed to sustain a decisive move above it. The projected downside support at $608.50 was not tested, but the anticipated range-bound action between $610 and $608.50 played out as expected. Traders who remained patient and followed our key levels had a successful session.

Looking Ahead

With no major economic data releases on Monday or Tuesday, markets will shift their attention to Wednesday’s FOMC minutes and Unemployment Claims. These reports could provide further clarity on the Fed’s stance and potential rate-cut timing, which remains a key driver of market sentiment. Of course any news of out the White may also move the markets so be cognizant of this potential risk.

Market Sentiment and Key Levels

SPY remains at a major resistance level of $610, which has proven difficult to break. The next key upside target is $615 and new all-time highs. Support is found at $606, $600, and $598. Bulls remain in complete control, but with a long weekend ahead, some consolidation or mild profit-taking is possible.

Expected Price Action

Our AI model forecasts a trading range of $605 to $614 for Tuesday, with a slight bullish bias. If SPY clears $610, we expect a push toward $615. However, if resistance holds and SPY drops below $608, a retest of $606 or lower is likely. A break of $606 and SPY will correct and move lower to $600. With no major catalysts early in the week, price action may remain subdued until Wednesday’s economic releases.

Trading Strategy

Traders should look for long opportunities on pullbacks to $606 and $608, targeting a breakout toward $610 and beyond. Shorts should be considered only on failed breakouts above $610, with downside targets at $608 and $606 OR on a failure of $606 to hold. Longs continue to be favored but given the extreme moves the past week, the market needs time to digest its recent gains. $610 is a major hurdle to overcome and its likely it will need to be tested a few more times before breaking to new highs. The VIX remains low at $14.77, suggesting controlled volatility, but traders should remain nimble ahead of midweek economic data.

Model’s Projected Range

The model anticipates a wide maximum trading range of $605 to $614.25, with a Call-dominated structure suggesting continued bullish momentum. SPY remains in its bull channel from the September lows, with upside potential toward new all-time highs if $610 is broken with conviction. The maximum upside is currently $628 with a downside in the channel of $587.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in an extremely narrow (so close the range is barely visible), Bullish Trending Market State, with price closing above resistance which is now support. There are no extended targets above implying a very weak bull trend. The MSI rescaled only once to its current levels at 1 pm EST with a range barely visible. This indicated a lack of buyers and sellers, which is why price did nothing into the close. A tight $1 range all day is rare but after a monster week, the market needs time to consolidate to build energy to break to new highs. MSI support is currently $609.30 and just a tad lower at $609.20.  
Key Levels and Market Movements:
We stated yesterday “bad Retails Sales is probably good news for the market” and today that proved highly accurate as poor Retail Sales numbers actually supported the market. We also stated probabilities “only slightly favor price breaking above $610 on Friday” so we knew not to seek longs from this level given how low the probabilities were price would make a new all-time high. At the open there were extended targets printing above with the MSI in a wide bullish state with price well above resistance turned support at our models major resistance level. There was little to do but wait for a pullback to go long or to fade the $610 level. With extended targets we did not attempt to short the market and instead waited for a test of MSI support at $609.50. At noon we decided to take a long on a weak failed breakdown at MSI support looking for $610. And that was it for us for given the MSI rescaled to be barely visible by 1 pm telling us to get out of the market and stay out until Tuesday. We heeded this warning and with a small profit we called it a week and relished in the monster trades we had all week. We had little to no stress on any of our trades, we were quite happy to call it a week, getting an early start to the long weekend. The MSI continues to inform who controls the market, when they take control and where, which allows traders to execute their plan profitably. The MSI does this every single day, day in and day out. The MSI keeps 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 to maximize your long-term success.
Trading Strategy Based on MSI:
Tuesday has no news but a long weekend can always throw a monkey wrench into any plan, especially from this administration. Weak Retails Sales actually supports the market given the Fed may have to reduce rates sooner rather than later given without consumption, demand slows which leads to disinflation. Therefore we continue to favor longs over shorts but with the MSI in an extremely narrow/nonexistent range, the bullish state is weak as we head into Tuesday. Anything can change on Sunday and Monday night so our advice for Tuesday is to look for the MSI to rescale to a more typical state and to trade what it tells you. Absent this, we continue to favor longs above $606 to $610 and on a break of $610 believe price will attempt to reach $615. A failure of $606 and price will move much lower. But be extremely careful shorting this market. The bulls are strong and empowered so finding long entries from double bottoms or tests of our major levels at MSI support is preferred. Shorts should only come from failed breakouts or on a material break of $606 with both volume and price confirming. As we restated Thursday a “failure of $600 is no longer an automatic short” and this holds true for $606. The bulls maintain complete control and shorts should only be taken on failed breakouts from major resistance. 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 on the right side of the market, your odds of success increase dramatically. If you do not have this invaluable tool, we highly suggest contacting your representative to secure a copy.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling $610 to $620 and higher strike Calls implying the Dealers believe there is a limit to the rally on Tuesday to $615. To the downside Dealers are buying $609 to $582 and lower strike Puts in a 4:1 ratio to the Calls they are selling, implying a bearish outlook for Tuesday. This positioning has changed from neutral to bearish, although it’s still not overly bearish. But certainly Dealers have added to their protection at these elevated levels.    
Looking Ahead to Next Friday:
Dealers are selling $610 to $625 and higher strike Calls while buying $612 Calls indicating the Dealers desire to participate in any rally by next Friday to as high as $615. Dealers have repositioned for a break of the all-time highs next week but as of today, they appear to have set a ceiling at $615. To the downside, Dealers are buying $609 to $570 and lower strike Puts in a 3:1 ratio to the Calls they are selling/buying, reflecting a slightly bearish view for next week. Dealer positioning has not changed from Thursday. While Dealers have increased their protection, Dealers continue to show little fear of lower prices, therefore there is a high probability SPY makes new highs next week. That said, we continue to “advise any long book purchase protection to the downside in the form of VIX Calls or SPY/SPX Puts or shorts in the Futures market”. We also advise reviewing Dealer positioning daily for clues to the market’s direction and given Dealer positioning changes and it’s essential to monitor these updates for shifts in sentiment.

Recommendation for Traders

Our advice for Tuesday is to trade what you see after the overnight sessions on Sunday and Monday night, looking for failed breakout and failed breakdown patterns from major levels. The bears are not participating in this market as they are waiting to see how the market reacts at the all-time high. Therefore we advise staying long until there is further price discovery at higher levels. Continue monitoring key levels and watch $605/$606 on any pullback given the bulls will not want this level to fail as they work toward new highs. Be sure to review the premarket analysis before 9 AM ET for any updates.

Good luck and good trading!