Market Insights: Thursday, March 13th, 2025

Market Overview

Stocks slid sharply on Thursday as renewed trade tensions and recession fears gripped Wall Street, pushing the S&P 500 officially into correction territory. The benchmark index tumbled 1.4%, marking a 10% decline from its February highs, while the Nasdaq fell nearly 2%, extending its losses from last week. The Dow Jones Industrial Average dropped over 500 points, down 1.3%, weighed down by economic uncertainty and a worsening trade war between the U.S. and its global partners.

Investor sentiment remained fragile as President Trump doubled down on tariffs against the European Union, proposing a 200% duty on imported wines and spirits. The announcement sent shockwaves through global markets, escalating concerns about retaliatory measures from trading partners. At the same time, the risk of a government shutdown looms large, with Senate Democrats blocking a Republican-led spending bill. This political standoff has added to market unease, as investors assess its potential economic fallout.

Adding to the volatility, wholesale inflation data showed no month-over-month increase in February, signaling weaker price pressures than expected. The Producer Price Index (PPI) rose 3.2% annually, slightly below forecasts. While lower inflation might support the Federal Reserve’s case for a rate pause, it failed to ease investor anxiety about broader economic weakness. Historical data suggests that market corrections like these—while painful—typically do not morph into full-blown bear markets. However, with ongoing political uncertainty and global trade disruptions, traders remain on edge, searching for signs of stability.

SPY Performance

SPY opened at $558.39 and initially attempted to hold above support but quickly reversed lower, touching an intraday low of $549.68 before recovering slightly. It closed at $551.42, down 1.33% for the day. Trading volume was 62.52 million shares, reflecting heightened market uncertainty. SPY now sits precariously near its key support at $550, with resistance levels at $555 and $560. A failure to hold above $550 could lead to a test of $540 in the near term.

Major Indices Performance

The Nasdaq Composite led the market lower, falling 1.96% as growth stocks came under heavy selling pressure. The Dow Jones Industrial Average dropped 1.37%, shedding over 500 points, while the Russell 2000 slid 1.50%, reflecting broad weakness in small-cap stocks. The S&P 500 declined 1.4%, officially entering correction territory. Market sentiment remains fragile as investors digest the latest inflation data, political uncertainty, and renewed trade tensions.

Notable Stock Movements

The “Magnificent Seven” stocks experienced another brutal session, with all names closing in the red. Meta led the decline, plunging 4.6%, followed by Apple, Netflix, and Tesla, each down more than 3%. The rest of the group also struggled, with Nvidia managing to close flat, making it the only stock that avoided significant losses. Tech-heavy names remain under pressure as investors rotate away from high-valuation stocks amid economic uncertainty.

Commodity and Cryptocurrency Updates

Crude oil slipped 1.61% to close at $66.59 per barrel, with our model continuing to forecast a move lower toward $60. Gold, however, surged 1.65% to end the day at $2,995 per ounce, reaffirming its status as a safe-haven asset. Bitcoin dropped 3.35%, closing just above $80,300. Our strategy remains the same: we are buyers of Bitcoin within the $83,000 to $77,000 range, taking profits around $85,000 as a trading vehicle. If price drops below $77,000 we will cease trading this asset.

Treasury Yield Information

The 10-year Treasury yield fell 1.07% to 4.270%, providing some relief to equities. Yields remain below the critical 4.5% threshold that typically pressures stocks. If yields climb back above 4.8%, market conditions could deteriorate further. Investors continue monitoring bond markets closely, as a sharp rise in yields would indicate renewed inflation concerns while declining yields could be forecasting a recession.

Previous Day’s Forecast Analysis

Wednesday’s forecast anticipated SPY remaining in a consolidation phase, with a trading range between $550 and $570. Resistance was identified at $560 and $565, while downside support levels were noted at $555 and $550. The model favored short trades below $570 and long trades only on failed breakdowns at key support. Given the broader market’s choppiness, traders were advised to be cautious with breakouts and focus on reactionary moves at support and resistance levels.

Market Performance vs. Forecast

Thursday’s price action largely validated the forecast. SPY struggled to hold above $555 early in the session and ultimately tested the crucial $550 level before bouncing slightly. The bearish bias played out as expected, with the rejection at $560 leading to a downward move. The model’s projected trading range held firm, and those who followed the strategy were able to capitalize on short trades below key resistance levels.

Premarket Analysis Summary

Thursday’s premarket analysis, posted at 7:17 AM ET, outlined a consolidation bias, with resistance at $560 and initial downside targets at $556, $555, and $553. The analysis indicated strong resistance at $560 and advised traders to be cautious with long positions unless clear momentum developed.

Validation of the Analysis

The premarket analysis was highly accurate, with SPY rejecting $560 early in the session and proceeding to test the $550 level before finding some support. Traders who took short positions on a stall at $560 saw profitable setups, while those looking for a bounce at $555 had to be quick in taking profits. The consolidation forecast was validated, emphasizing the importance of trading within the established range rather than chasing momentum.

Looking Ahead

Friday’s key economic release is the University of Michigan’s Consumer Sentiment report, which could provide insights into consumer confidence amid ongoing economic uncertainties. Next week, all eyes will be on Wednesday’s FOMC Statement, a pivotal event that could shift market direction significantly.

Market Sentiment and Key Levels

SPY is now trading at $551.42, dangerously close to breaking major support at $550. Resistance remains at $553, $555 and $560, while further downside targets include $550, $548 and $545. With the bears firmly in control, the market remains under pressure unless SPY can reclaim levels above $570.

Expected Price Action

Our AI model forecasts a trading range between $545 and $565 for Friday. The market remains Put-dominated, with a tightening range suggesting continued consolidation. If SPY holds above $550, a push toward $553 and $555 is possible, but any failure below $550 could accelerate losses toward $540 ultimately. Overnight the market may rally to test higher levels near $560 but we remain sellers of all rallies until there is a material change in market dynamics.

Trading Strategy

Short trades remain favored below $560, with downside targets at $553 and $550. Long trades should only be considered on clear failed breakdowns at major support below $550. With the VIX still elevated at 24.66, traders should expect large price swings and focus on quick profit-taking. Given current volatility, risk management is critical—traders should trade smaller and remain flexible to shifting momentum.

Model’s Projected Range

The model’s projected maximum range for Friday is $543.25 to $562.50, with strong resistance at $553, $555 and $560. Below $550, there is little to prevent a test of lower levels, with $548, and $545 as the next major supports. There is little below $545 to keep price from falling further. PPI came in lower than expected implying slowing inflation. This didn’t do much to move the market higher. Sellers moved price lower after multiple tests of $560 failed, pushing price below yesterday’s low and to the major $550 level which has been a line in the sand for several months. Price found support at $550 and reversed to $555 before settling lower on the day, down 1.33%. $550 to $565 is now just noise and there remains little to suggest the market has found its bottom. The projected range continues to narrow so it’s possible the market takes a day or two to consolidate before its next major push. Of course this is subject to change with any economically hostile news out of the White House. A failure of $550 and its likely price will fall to at least $540 as it works its way to the August low at $510, a 16.5% decline from the highs which is historically about average. The bear trend channel from the December highs has been redrawn and price is trading along the lower channel with nothing to suggest price will resume the bull trend anytime soon. SPY is well below the 200 DMA at $570 which will act as resistance and until that is reclaimed, the bears are in complete control.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Bearish Trending Market State, with price closing near resistance. The MSI range is average without extended targets below, implying a weak bear trend for tomorrow. Overnight the MSI rescaled briefly to a Bearish Trending Market State from a ranging state, which set up today’s decline. After PPI data failed to move the market higher, a test and failure of MSI resistance near $560 led to the MSI rescaling lower several times in rapid succession. Extended targets printed below while the MSI was rescaling, forecasting the push to major support at $550. Once there the MSI rescaled higher, but remained in a bearish state. This rescale higher was an indication the trend was weakening and soon after, extended targets ceased printing. This implied the end of the bear trend for the day. The MSI spent the bulk of the afternoon session in its current state with a brief respite in a ranging state. MSI support is currently $550.50 and resistance is at $553.13.  
Key Levels and Market Movements:
We stated Wednesday yesterday was “likely nothing more than a minor relief rally”. We also stated, “if $553 fails, probabilities favor SPY falling to $550 at a minimum”. Finally we stated our “model continues to forecast rallies will be sold”. With this plan in hand, knowing our models are at least 70% accurate, we traded the triple top at the open short from $558.75 after multiple failed attempts to reach MSI resistance. Our out of the gate short had us taking first profits at MSI support at $557.30, holding our runners for lower levels. The MSI rescaled lower to a narrow bearish state but only briefly printed extended targets. We took a second target at our model’s major $555 level and continued to hold 10% of our position for more gains. We did not reverse long but did move our stop to breakeven on a failed breakdown pattern. Price reversed hard and while we thought it was a fake out, our stop was hit on 10% of our position and we went flat. But another test of MSI resistance and the $560 level and we decided to reload short after price broke MSI support at $557. We scalped a first target at MSI support at $556 and held to see if price would continue to fall. We did not move our stop to breakeven given as we have stated several times, when trading with the trend and the controlling party (the bears) we are fluid with our stop giving the market room to get with the program. Price came right back to our entry so we reloaded to a full size and once again took first profits at $556. And then the MSI started rescaling lower so we felt good we were back in this short trade and held for a retest of the day’s lows at $555. The MSI rescaled lower and provided a second target for us to exit at MSI support and we held the remaining 10% of our position to see if the market would continue to fall. And so it did and it kept falling with extended targets below for most of the morning’s decline. Finally when price reached our major level at $550, which again was part of our trading plan for the day per the above, we decided to close our runner on a failed breakdown and called it a day. We did not reverse long as the MSI was still printing extended targets and we did not want to risk the day’s profits. While today was a bit more challenging and had set ups which required more skill and expertise, all of the trades today came from our model’s forecast and the MSI. We said yesterday was nothing but a relief rally, we said if $553 failed the market would reach $550 and we said all rallies would be sold. All three pieces of information were not only spot on but highly actionable. This is intelligence only provided by a very smart and knowledgeable AI model. We are not aware of any other firm that provides this type of high quality, incredibly accurate information every single trading day. We ended the today three for three with a couple of quick scalps and one monster trade 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:
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 so the government doesn’t shut down. This has the potential to seriously rock the markets. We highly recommend only trading intraday and only trading what you see as news of the Senate’s work to resolve this issue is presented to the public. Absent external macro data or news events which may move the market, we continue to be in a market driven by news. Price broke out of the large range between $555 and $565, reaching a critical level at $550. Now everything in this $15 range from $550 to $565 is noise. First and foremost while we have a very high degree of confidence in our models, trading what you see while using the MSI to guide you in real time is the best way to be successful in the current environment. With that as context for tomorrow’s forecast, our general lean is SPY may attempt to back test $560 to attempt a breakout toward $570. If the bulls are successful moving above $560, they need to clear $565 to get to $570. If $550 fails, probabilities favor SPY falling to $545 at a minimum and mostly likely much lower. Our model continues to forecast $550 is the major level to watch. Should that fail, look out below as $500 will be in play. Volatility rose again today and remains elevated. We are still waiting for a VIX spike on volume to provide some support that the market has capitulated from all the pain inflicted on it. VIX above $32 to $40 on high volume and the bottom is likely near. For Friday the MSI is forecasting a weak bear trend so price could simply continue to move in this large noise filled range until an external catalyst changes things. Above $570 and the bulls will press for higher prices. Below $570 and the bears will retest $550 and likely lower. Therefore we favor short trades to as high as $570, but above $570 will only seek failed breakouts as triggers to entry. We also favor long trades but only on failed breakdowns and only from our models major support levels below $555. Our model continues to forecast rallies will be sold until price reclaims $585 OR until the trade wars are suspended. Rallies will likely be used as opportunities to lighten long positions. Until 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 $561 to $580 and higher strike Calls while buying $552 to $560 Calls indicating the Dealer’s desire to participate in any rally on Friday. They have very light long positions. To the downside Dealers are buying $560 to $540 and lower strike Puts. Dealers are buying Puts in a 2:1 ratio to the Calls they are selling/buying, implying a neutral posture for Friday. This positioning has remains unchanged from neutral to neutral. Dealers continue to own major downside protection and continue to add to this protection with very far out of the money options in case the market continues to unravel. Even for this Friday they now have $490 Puts in some size.  
Looking Ahead to Next Friday:
Dealers are selling $579 to $600 and higher strike Calls while buying in very large size $552 to $578 Calls indicating the Dealers desire to participate in any rally next week to as high as $580. Dealers do not seem to believe prices will exceed $580 by next Friday, indicating a ceiling to any recovery. Dealers are however heavily invested in Calls reflecting some conviction that prices may rally next week. To the downside, Dealers are buying $551 to $510 and lower strike Puts in a 1:1 ratio to the Calls they are selling/buying, reflecting a slightly bullish view for next week. Dealer positioning has changed from neutral to slightly bullish. Dealers have added massive quantities of both much lower Puts but also purchased Calls in equal amounts. Dealer positioning is telling us they are 50/50 on whether price will go higher or move much lower. The lows Dealers are protecting is as low as $460 which is almost $100 lower than current levels. Clearly this is crash protection for the Dealers but it is new and something to be aware of. On the other hand they have bought all kinds of Calls so if a rally does develop, they will get paid all the way to $580. Dealers are covering their bets no matter which way the market moved. 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 Friday is the same as yesterday: remain alert and exercise caution given the continued, economically hostile policies coming out of the White House and especially the government shutdown debate. The market is reactive to any news, good or bad and it’s still probable rallies will continue to be sold. We continue to advise trading smaller, adjusting to current conditions, being prepared to trade 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. If you do countertrend trade, do so in quarter size given the strength of the bear market. The bears remain in complete control and at a minimum $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!