Market Insights: Friday, March 14th, 2025

Market Overview

Stocks rebounded sharply on Friday as investors welcomed signs of easing political tensions and a potential short-term bottom in equities. The S&P 500 soared 2.07%, reversing its correction-level losses from Thursday, while the Nasdaq outperformed with a 2.16% surge. The Dow Jones Industrial Average rallied over 600 points, climbing 1.43% as a government shutdown was averted at the last minute.

Wall Street faced heavy selling pressure earlier in the week due to concerns about escalating tariffs and the economic fallout of restrictive trade policies. However, sentiment shifted as Senate Democratic leader Chuck Schumer stepped back from blocking a funding bill, allowing the government to remain open through September. The development helped ease fears of an immediate fiscal crisis, giving markets a much-needed relief rally.

Despite the strong rebound, all three major indices ended the week in negative territory, with the S&P 500 and Nasdaq Composite both down more than 2%. While lower-than-expected inflation data earlier in the week initially fueled optimism, concerns over weak consumer sentiment—evidenced by the University of Michigan's survey showing confidence plummeting to 57.9—kept traders cautious. Gold briefly spiked above $3,000 an ounce, reflecting ongoing uncertainty around economic conditions, while Bitcoin reclaimed $84,000 after a volatile week. With the Federal Reserve’s FOMC statement coming up next Wednesday, investors remain on edge, wondering if this bounce has legs or if selling will resume in the coming days.

SPY Performance

SPY surged 2.07% on Friday, closing at $562.81 after opening at $556.17. It reached a high of $563.83 and a low of $551.49 during the session. Trading volume remained elevated at 57.54 million shares, signaling renewed interest from buyers. The rally allowed SPY to reclaim its short-term resistance at $560, though it remains below the critical 200-day moving average at $570. A further push above $565 next week could shift sentiment more bullish, while failure at this level may lead to a retest of $555.

Major Indices Performance

The Nasdaq Composite led the rebound, rising 2.16% as tech stocks saw strong inflows following a sharp selloff earlier in the week. The Russell 2000 also saw significant gains, climbing 2.42% as small-cap stocks recovered some lost ground. The S&P 500 posted a 2.07% gain, while the Dow Jones Industrial Average trailed slightly behind with a 1.43% increase.

Market sentiment improved after Senate leaders confirmed that a short-term funding bill would prevent a government shutdown. Additionally, optimism around potential support for the market ahead of next week’s FOMC meeting helped fuel Friday’s broad-based rally. However, the key test will be whether the market can maintain these gains into next week, or if this was merely a temporary bounce.

Notable Stock Movements

The "Magnificent Seven" stocks enjoyed a strong rally, with Nvidia leading the charge, up over 5%, followed by Tesla and Netflix, both gaining more than 3%. The rest of the group also finished in positive territory, marking a notable shift from the heavy selling pressure earlier in the week. The resurgence in these high-valuation names suggests some renewed risk appetite among investors, though the sustainability of the rally remains uncertain.

Commodity and Cryptocurrency Updates

Crude oil edged up 0.96% to close at $67.19 per barrel, though our model still forecasts a move lower toward $60 as economic concerns weigh on energy demand. Gold remained relatively flat, up just 0.08%, closing at $2,994 per ounce after briefly surpassing the $3,000 mark earlier in the session. Bitcoin jumped 4.19%, closing just above $84,100, as dip buyers stepped in. We exited our trading position today as Bitcoin broke $85,000 and remain buyers of Bitcoin in the $83,000 to $77,000 range, with a profit-taking target around $85,000.

Treasury Yield Information

The 10-year Treasury yield rose 1.03% to 4.320%, remaining below the critical 4.5% level that could threaten equities. A move above 4.8% would likely pressure stock prices further, while a surge past 5.2% could signal a deeper market correction. Yields have been volatile in recent weeks, with investors closely watching next week’s FOMC statement for any signals on future interest rate policy.

Previous Day’s Forecast Analysis

Thursday’s forecast anticipated SPY facing resistance at $560 while maintaining key support at $550. The model projected a potential consolidation phase, with traders advised to be cautious with long positions unless price action confirmed a move higher. The expectation was for a choppy session with the potential for sharp reversals based on macroeconomic developments.

Market Performance vs. Forecast

Friday’s price action closely aligned with our model’s forecast. SPY initially tested support near $555 before reversing strongly, reclaiming resistance at $560 and even briefly touching $563. The consolidation bias was accurate, but the unexpected boost from government funding news pushed the market higher than initially projected. Traders who followed the model's guidance, waiting for confirmation before taking long positions, were rewarded with a solid rally.

Premarket Analysis Summary

Friday’s premarket analysis, posted at 8:47 AM ET, identified $554 as the key dividing line between sustained upside and renewed selling pressure. Resistance targets were set at $558, $560, and $565, with support at $552.50 and $549. The forecast cautioned against aggressive short trades unless price broke decisively below $552.50.

Validation of the Analysis

The premarket analysis was highly accurate, with SPY respecting the identified levels. Price found support near $552.50 before pushing through $554, which led to a rally towards $560 and beyond. The projected resistance levels at $560 and $565 served as key inflection points, with traders who followed the guidance able to capitalize on well-defined setups. The hesitation on short entries proved correct, as buyers controlled the session.

Looking Ahead

Next week is packed with critical events, with Wednesday’s FOMC statement taking center stage. Monday’s Retail Sales data could provide insight into consumer spending trends, while Thursday’s Unemployment Claims will be another key economic indicator. With market sentiment shifting rapidly, traders should be prepared for increased volatility and trade what they see.

Market Sentiment and Key Levels

SPY is now trading at $562.81, reclaiming some lost ground but still well below its 200-day moving average at $570. Resistance remains at $564, $565, and $570, while support levels to watch are $560, $558, $555, and $550. Bulls will need to sustain momentum above $560 to challenge the broader downtrend, while bears may look to fade rallies near resistance.

Expected Price Action

Our AI model forecasts a trading range between $555 and $570 for Monday. The market remains in a consolidation phase, with price action likely to remain choppy ahead of the FOMC meeting. If SPY holds above $560, a test of $565 and $570 is possible. However, failure below $560 could lead to a retest of $555 and potentially lower levels.

Trading Strategy

Short trades remain viable below $570, with downside targets at $565, $560, and $555. Long trades should be considered only if price holds above $560, with targets at $564 and $565 OR if price retests lower levels, such as $555. The VIX fell over 10% today but remains elevated, suggesting continued volatility. Traders should manage risk carefully, taking profits quickly and avoiding overexposure.

Model’s Projected Range

The model’s projected maximum range for Monday is $551.25 to $570.75, indicating a narrowing range that implies consolidation. The market is currently Call-dominated, suggesting a slightly bullish outlook. Consumer Sentiment came in much lower than expected implying the rising risk of a recession. While the market originally sold off on the news, with the Senate passing a CR to keep the government open until September caused the market to quickly reverse course. The bulls were able to reclaim several levels, closing at $562, well below the 200DMA but significantly off the recent lows. The 200 DMA is the next major test for the bulls and certainly $550 remains a critical level of support which needs to hold on any retest. The noise filled range between $550 to $565 remains and while the bulls got an elusive green day today, the hard part is the follow through next week. The bears still control the market and the bulls need to defend $560 to build on today’s momentum. If the bulls are able to hold price above $560, the market will move toward the 200 DMA. If price falls below $560, SPY will retrace to $555 at a minimum which must hold, otherwise price falls to the lows of the range at $550. A failure of $550 and its likely price will fall to at least $545 as it works its way to the August low at $510, a 16.5% decline from the highs which is historically about average. SPY is trading in the lower end of the bear trend channel from the December highs with room both higher and lower. This is a broad channel which will likely contain price for at least a few weeks. SPY is well below the 200 DMA at $570 which will act as significant resistance and until that level is reclaimed, the bears remain in complete control, even with today’s rally.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Bullish Trending Market State, with price closing well above resistance turned support. The MSI range is narrow with extended targets above, implying a moderate bull trend. For the market to continue higher the MSI will need to rescale higher and expand its range early next week, otherwise a likely peak to this rally is in place. Overnight the MSI rescaled to a ranging state and then to a bullish state while printing extended targets above. This indicated the herd was participating in today’s relief rally. After UoM Consumer Sentiment was released, price tested MSI support and extended targets stopped printing. MSI held price and on news of a resolution to the looming government shutdown, the market ripped straight up. The MSI continued to print extended targets from 10 am to the close, but did not rescale higher, indicating a strong trend but perhaps one with limits to its strength. MSI support is currently $556.25 and lower at $554.81.  
Key Levels and Market Movements:
We stated Thursday “Friday UoM Consumer Sentiment is unlikely to move the markets. More important for tomorrow is the end of day deadline to extended the debt ceiling”. We also stated, “our general lean is SPY may attempt to back test $560 to attempt a breakout toward $570.” And so after the open with price moving higher into the UoM report, we held off trading until after the 10 am report given the MSI was in a bullish state and extended targets were printing. When price fell after the UoM report, given we knew this data was less important than the risk of a government shut down, when price set up a textbook failed breakdown at MSI resistance turned support just after 10 am ET, we went long at $556.25, just above the MSI and our premarket level, looking for our next level up at $560. We took a first target at $560 and with extended targets printing above, held our runners for our next higher level at $565. Price continued higher but stalled at $562 so we took a second 20% target and held 10% of our position to see if the market might flush higher into the close, typical of Fridays in a strong trend. And we got the late flush higher to $564 and on a failed breakout, we exited our final 10% runner for a one and done day. One that paid handsomely 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. 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 Retail Sales which will provide insight into the health of the consumer. We do not anticipate too much from this release as the market has already priced in a consumer pulling back. The only question is by how much. Absent other external macro data or news events which may move the market, while today’s relief rally was welcome, we continue to be in a market driven by news. Price remains in the large range between $550 and $565 with $550 being critical support. Everything in this $15 range is noise. Trading what you see while using the MSI to guide you in real time is the best way to be successful in the current, news driven environment. For Monday, our general lean is SPY will back test $560 which must hold for the bulls to attempt to push price to the 200 DMA. A failure of $560 and price will move to $555 at a minimum. If the bulls are successful staying above $560, they will find material resistance at $565 which they need to clear to get to the next major resistance level of $570. At the other extreme if $555 fails, probabilities favor SPY falling to $550 at a minimum and mostly likely much lower. Volatility dropped over 11% today yet we haven’t yet seen the VIX spike on volume to provide some support that the market has capitulated. This may come at any time. Typically markets do not reverse like they did today without some evidence of capitulation. For Monday the MSI is in a moderate bull trend but with a very narrow MSI, the trend is likely to stall at the current levels. Watch for the MSI to rescale higher to confirm the continuation of today’s rally. If the MSI does not rescale, price is likely to retest lower levels. Certainly above $570 the bulls will press for higher prices. Below $570 and the bears will push to retest $550 and likely lower. Therefore we continue to favor two way trading, favoring shorts to as high as $570. Above $570 will only seek failed breakouts as triggers to entry. We also favor long trades but only on failed breakdowns from our models major support levels below $560. Our model continues to forecast rallies will be sold until price reclaims $585 OR until the trade wars are suspended as rallies will likely be used as opportunities to lighten long positions. Until these macro issues are resolved, favor the bears, selling rallies to as high at $570. Continue to seek failed breakouts or other topping patterns from major levels when possible. 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 $571 to $580 and higher strike Calls while buying $563 to $570 Calls indicating the Dealer’s desire to participate in any follow through on Monday. To the downside Dealers are buying $562 to $550 and lower strike Puts. Dealers are buying Puts in a 1:2 ratio to the Calls they are selling/buying, implying a strongly bullish posture for Monday. This positioning has changed from neutral to strongly bullish. Due to price moving 2% with many of the Dealer’s positions expiring or ending ITM, its highly probably the Dealers are hedging with Futures in addition to their Option positions. Dealers continue to own major downside protection in case the market unravels. Therefore we would not read too much into Dealer positioning for Monday and rely more heavily on our model’s projections.   
Looking Ahead to Next Friday:
Dealers are selling $579 to $600 and higher strike Calls while buying in size $563 to $578 Calls indicating the Dealers desire to participate in any rally next week to as high as $590. Dealers are heavily invested in $573 to $580 Calls should price resume higher by the end of next week. To the downside, Dealers are buying $562 to $541 and lower strike Puts in a 2:3 ratio to the Calls they are selling/buying, reflecting a heavily bullish view for next week. Dealer positioning has changed from slightly bullish to heavily bullish. Dealers have amassed large quantities of both much lower strike Puts and higher strike Calls. Dealer positioning tells us they believe prices will move higher next week but Dealers are also prepared for any collapse that may develop. Dealers are covering their bets no matter which way the market moves but have shifted their sentiment to the long side. 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 expect more muted price action early in the week as the market takes a breath and pauses ahead of FOMC. Two way trading if favored, but like every day this week, remain alert and exercise caution given the continued, economically hostile policies coming out of the White House. The market is highly reactive to any news, good or bad and it’s probable rallies will continue to be sold until price reclaims the 200 DMA at a minimum. We continue to advise trading smaller, adjusting to current conditions, being prepared to trade what you see and with the trend, only contemplating counter trend trades when price is testing a major level and the MSI is not printing extended targets. Use a failed pattern as a trigger to entry and you will achieve the best results. While we continue to advise two way trading from the “edges” using our favorite failed breakout and failed breakdown patterns, do not fight the trend. The bears remain in complete control and $570 needs to be reclaimed for the bulls to have any chance of moving price higher. A break above $570 will target $575 but $585 still needs to be reclaimed for the bulls to take any control away from the bears. A failure to move above $570 and price will continue to retest lower levels. A break of $550 will likely lead to a test of the August lows at $510. Stay nimble, continuing to monitor key levels seeking to initiate entries from our model’s major levels with the controlling party, which is currently the bears. Be sure to review the premarket analysis before 9 AM ET for the day’s updates.

Good luck and good trading!