Market Insights: Thursday, February 13th, 2025

Market Overview

U.S. stocks surged on Thursday as investors digested hotter-than-expected inflation data while also reacting to a significant policy announcement from President Trump. The S&P 500 climbed 1.06% to close just a few points shy of its record high, while the Dow Jones Industrial Average gained 0.83%, lifted by strong earnings and renewed optimism around economic growth. The Nasdaq Composite led the way, jumping 1.27%, fueled by rallies in tech heavyweights like Nvidia and Tesla.

Markets initially wavered after the release of the Producer Price Index (PPI), which indicated that wholesale inflation remained stubbornly elevated. However, the momentum shifted after President Trump announced reciprocal tariffs on all U.S. trading partners but delayed their implementation until April. This move eased immediate concerns about a trade war while providing a window for negotiations.

Earnings season also continued to bolster sentiment. Nearly 70% of S&P 500 companies that have reported so far have exceeded analysts’ expectations, with standout performances from companies like Airbnb, which soared 15% on stronger-than-expected revenue. Meanwhile, Meta extended its winning streak to 19 consecutive sessions, further solidifying its role as one of the market’s biggest winners this year.

Despite concerns over inflation and trade policy, investors remain largely bullish, as the market appears determined to test new all-time highs. Traders are now looking ahead to Friday’s retail sales data, which will provide further insight into consumer strength and the broader economic trajectory.

SPY Performance

SPY rallied 1.06% on Thursday, closing at $609.73 after reaching a high of $609.94. The ETF opened at $604.48 and briefly dipped to a low of $603.20 before resuming its upward march. Trading volume came in at 37.56 million shares, below average, suggesting a measured but persistent buying appetite. Resistance remains at $610 and $614, while support sits at $608, $606, and $604. Bulls remain in control as the market eyes new record highs.

Major Indices Performance

The Nasdaq Composite led the day’s gains, climbing 1.27% as tech stocks continued their strong run. The S&P 500 followed with a 1.06% increase, nearing its all-time high. The Dow Jones Industrial Average added 0.83%, supported by strength in industrials and financials. The Russell 2000 gained 1.13%, reflecting broad-based market participation. Sector-wise, technology stocks were the clear winners, driven by major gains in Tesla and Nvidia. Consumer discretionary stocks also outperformed, thanks in part to Airbnb’s earnings beat. Defensive sectors like utilities and consumer staples lagged slightly as investors rotated back into growth-oriented stocks.

Notable Stock Movements

The Magnificent Seven stocks were green across the board, with Tesla soaring more than 5% and Nvidia climbing over 3%, leading the market higher. Meta continued its historic run, closing higher for the 19th straight session. Amazon, Alphabet, Microsoft, and Apple also advanced, adding to the Nasdaq’s strong performance. Airbnb stood out with a 15% surge after posting better-than-expected earnings, reaffirming strong consumer demand for travel and experiences. Meanwhile, Robinhood jumped after reporting a surprise profit, while Reddit’s stock struggled following weaker-than-expected user growth numbers.

Commodity and Cryptocurrency Updates

Crude oil dipped slightly, losing 0.15% to close at $71.28 per barrel, as traders balanced demand concerns against geopolitical risks. Gold rebounded strongly, rising 0.97% to $2,957 per ounce, as investors sought inflation hedges after the PPI report.

Bitcoin pulled back 1.21%, closing just above $96,000. Despite the decline, 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 2.29% to settle at 4.533%, easing concerns that higher rates could weigh on equities. However, yields remain above the critical 4.5% level, a key threshold for market sentiment. A move above 4.8% could trigger fresh selling in equities, while a sustained break above 5% would likely lead to broader market turmoil. At 5.2%, a major correction of 20% or more remains a real risk.

Previous Day’s Forecast Analysis

On Wednesday, our AI model projected a trading range of $599 to $608, with a long bias. Resistance was identified at $606 and $610, while support was expected at $600 and $597. The model suggested that if SPY remained above $605, further upside was likely, while a failure to hold that level could push prices lower. The forecast also noted that the market remained Call-dominated, with a preference for long positions near support and short setups on failed breakouts. Given the high-impact PPI data, traders were advised to remain nimble and focus on failed breakout/breakdown setups.

Market Performance vs. Forecast

SPY’s actual trading range of $603.20 to $609.94 exceeded our model’s forecasted range slightly, with the ETF breaking above key resistance at $606 and closing just below the $610 level. The Call-dominated positioning played out as expected, driving the market higher into the close. Traders who followed the model’s guidance had excellent long opportunities near $603, with the rally surpassing resistance and approaching the all-time high. The forecast accurately anticipated the market’s bias toward upside continuation, reinforcing the reliability of our trading levels and market outlook.

Premarket Analysis Summary

Thursday’s premarket analysis, posted at 8:49 AM ET, projected a positive bias with initial resistance at $605.25 and upper targets at $608.25 and $610. The analysis suggested that if SPY cleared $605.25, the path toward $608 and potentially $610 would open. Conversely, failure to hold above $605.25 could lead to range-bound action between $605 and $601. Lower targets of $600 and $597 were noted in case of profit-taking, with a warning that sellers might struggle to push prices significantly lower.

Validation of the Analysis

The premarket analysis was highly accurate, as SPY successfully cleared $605.25 early in the session and pushed toward $609.94 before consolidating just below $610. The expected range of $601 to $608.25 was tested, validating the model’s projections. Traders who utilized the premarket bias level of $605.25 had multiple opportunities to enter long trades, capitalizing on the breakout. The analysis correctly anticipated resistance at $608, which momentarily stalled the rally before momentum carried SPY higher.

Looking Ahead

Friday’s focus shifts to Retail Sales data, the final major economic release of the week. A strong report could further boost equities, reinforcing the bullish narrative. However, a downside surprise may reignite concerns over economic momentum, adding volatility to the session. There is little to no news next Monday or Tuesday so catalysts to the market for the next few days are likely to come from White House announcements and not the market.

Market Sentiment and Key Levels

SPY has moved to major resistance at $610 which is likely to break in the next day or two. $614 looks like the next major level to overcome which will be a challenge for the bulls. Support remains at $608, $606, and $604. Bulls are firmly in control, but the market’s recent strength suggests potential for consolidation before another breakout attempt. A sustained move above $610 could open the door to all-time highs, while a breakdown below $605 could trigger a retest of $600 and consolidation to build energy for the next push higher.

Expected Price Action

Our AI model forecasts a trading range of $605 to $614 for Friday, with a long bias. If SPY breaks above $610, the next target is $614. Failure to hold $608 could see a retracement to $606 or lower and a break of $605 and its very likely the market enters a longer consolidation period. The last two Friday’s the market has sold off after solidly green weeks. The bulls would like to break this trend tomorrow but be aware that this is a distinct possibility. Market sentiment remains bullish, but traders should prepare for potential choppy price action.

Trading Strategy

Traders should look for long opportunities on dips toward $604 and $606, targeting $608 and $610. Shorts should be considered on failed breakouts above $610, with downside targets at $608 and $606. The VIX remains low, suggesting controlled volatility, but a spike could shift market dynamics.

Model’s Projected Range

The model anticipates a wide, maximum trading range from $603.50 to $613.75, implying potential for both consolidation and trend continuation. The market remains Call-dominated, signaling bullish momentum. Resistance is at $610 and $614, while support lies at $608 and $606 with SPY trading in the bull channel from the September lows.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a wide, Bullish Trending Market State, with price closing at resistance. There are extended targets above implying a strong bull trend. The MSI rescaled several times higher in the premarket after PPI with extended targets above indicating a strong bull trend. The MSI range expanded and by 10 am while extended targets stopped printing and price tested MSI support at $605, support held firm and by 2 pm the MSI again began a series of rapid rescalings higher with extended targets above after the White House announced reciprocal tariffs would not go into effect for six months. The market took this information as a positive, offsetting the hotter than expected PPI and pushed price toward to the all-time high. MSI support is currently $606.57 and resistance is $609.32.  
Key Levels and Market Movements:
As we stated yesterday do “not fight the trend, however, if the MSI is printing extended targets, OR if the MSI range widens substantially. We continue to favor longs over shorts” and today that advice proved quite valuable given the strength of the trend. We also stated, “continue to seek failed breakout/breakdown patterns as triggers to entries, deferring to the bull trend”. And today there were two perfect failed breakdowns which got us long and trading with the trend. After the open at 9:40 am ET with extended targets printing off and on in the premarket, and with the MSI in a bullish state, price set up an almost perfect failed breakdown at MSI support at $603.50 which got us into our first long trade. We had planned to take first profits at $604.50 but extended targets started printing above so we held on to our trade and with the MSI rescaling higher, we waited for the MSI to stop rescaling to take first profits at $607. The MSI briefly rescaled lower so we decided to take off the rest of the trade at MSI resistance and waited to see if price would set up a failed breakout for a short trade, given this was also part of our plan with price above $606. Price didn’t provide this pattern so we didn’t short MSI resistance and waited for the next set up. This came just after 1 pm on a textbook failed breakdown at $605. We were long a second time, again planning to take a first target at MSI resistance at $607.50. But once again extended targets started printing above so we held onto our trade and after a series of rapid rescalings higher, we stayed long into the close. Two monster trades, with the trend, inline with our plan and made possible by the MSI telling us in real time who was pushing the market and where. Trading doesn’t get any easier than this. Another extremely profitable day going two for two without taking any heat or feeling any pressure. There is no stress or emotions to overcome when you trade in this fashion. Using the MSI, our major levels and failed patterns, we eliminate most psychological issues related to day trading which is a major benefit of trading with our model’s plan and the MSI. The MSI informs who controls the market, when they take control and where, which allows you to trade your 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:
For Friday Retail Sales will be released in the premarket which could push price both higher or lower. Today’s PPI gave some indication that the consumer was pulling back which is what the Federal Reserve is trying to accomplish. Less consumption leads to less demand which reduces prices, lowering inflation. If Retails Sales are weak, while not great for the economy, that will potentially support lower interest rates. For tomorrow bad Retails Sales is probably good news for the market. Again not having the benefit of this information, for tomorrow trade what you see. With the MSI in a Bullish Trending Market State and with extended targets above, we expect prices to drift higher overnight toward $610. There is major resistance at $610 but it’s possible after the Retail Sales number is released the market pushes past this level and $610 turns to support. It’s also possible extended targets stop printing and a retest of $610 fails and prices pullback to $606. Probabilities only slightly favor price breaking above $610 on Friday, therefore we advise caution initiating longs from this level. Instead look for a pullback to $608 or $606 and enter long at MSI support. If extended targets stop printing above, we also favor a mean reversion short on a failed breakout from $610 or slightly higher. That said we still advise not fighting the trend, because if $610 breaks on any volume, the market will find its way to $614. And as we stated yesterday a “failure of $600 is no longer an automatic short”. The bulls have assumed complete control so shorts are risky and should be only be taken on failed breakouts and 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 for tomorrow at $614. Their ceiling today at $610 certainly held. To the downside Dealers are buying $609 to $585 and lower strike Puts in a 2:1 ratio to the Calls they are selling, implying a neutral to outlook for Friday. This positioning has changed from slightly bearish to neutral.   
Looking Ahead to 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 $620. Dealers have repositioned for a break of the all-time highs next week. 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 changed from bearish to just slightly bearish. While Dealers have increased their protection, Dealers do not seem to be concerned about lower prices. Today we had the catalyst that pushed price toward the all-time high and it now looks like a high probability that SPY makes new highs next week, if not tomorrow. 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 Friday is to trade what you see after Retail Sales are released and look for failed breakout and failed breakdown patterns from major levels. The bears haven’t had any luck moving price lower and are likely waiting to see how the market reacts at the all-time high. Therefore we advise staying long until there is more price discovery at higher levels. We stated yesterday eventually “this consolidation will end and given the market is setting up a bull flag, the probability of a resolution higher is likely.” That remains true for Friday as well. Continue monitoring key levels and watch $605 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!