Market Insights: Thursday, March 6th, 2025

Market Overview

US stocks were pummeled on Thursday, as tariff confusion from the Trump administration and weak economic data combined to send markets sharply lower. The S&P 500 fell nearly 2%, closing at its lowest level since November, while the Nasdaq plunged more than 2.6%, officially entering correction territory by falling more than 10% from its December highs. The Dow lost over 400 points, down 1%, as investors navigated yet another round of tariff whiplash.

President Trump’s decision to pause tariffs on some Mexican goods, followed by a last-minute extension of this pause to certain Canadian imports, initially offered some relief. However, markets quickly reversed course when new comments suggested these pauses were conditional and could be reversed at any time. Trade uncertainty overshadowed everything, particularly in the tech sector, which led the decline after Marvell’s disappointing sales forecast reignited concerns that the AI boom might not be enough to offset broader economic weakness. Marvell shares cratered nearly 19%, dragging down peers like Nvidia, Broadcom, and AMD. Adding fuel to the fire, weekly jobless claims came in at 221,000—slightly better than last week but still indicative of softening labor conditions. All eyes are now on Friday’s critical jobs report, with fears of stagflation mounting as economic data continues to weaken while inflation pressures persist.

SPY Performance

SPY opened Thursday at $575.65 and quickly dropped to a session low of $570.12 as sellers overwhelmed early dip buyers. The afternoon saw a brief bounce attempt, but the rally failed well below resistance at $578, and SPY ultimately closed at $572.86, down 1.79% on the day. Trading volume was slightly above average at 67.47 million shares, showing that both bulls and bears were active as the market digested fresh tariff headlines and economic data.

Major Indices Performance

The Nasdaq led Thursday’s losses, plunging 2.87% and officially entering correction territory as tech stocks led the broad sell-off. The S&P 500 followed, dropping 1.79% to close at its lowest level since November. The Russell 2000 fell 1.54%, as small caps remain particularly vulnerable to trade uncertainty and economic softness. The Dow Jones Industrial Average held up slightly better but still lost 1.07%, pressured by broad-based selling across nearly every sector. Defensive sectors like utilities offered some shelter, but it was not enough to offset losses in economically sensitive and technology stocks, which bore the brunt of the selling.

Notable Stock Movements

It was a sea of red for the Magnificent Seven, with Netflix leading the decline, falling more than 8.5%. Nvidia and Tesla each lost over 5.6%, while Meta and Amazon also suffered heavy losses. This deep sell-off in key tech leaders highlights growing concerns that these names, which led the market higher for much of 2024, may now be at risk of further downside as economic growth slows and valuation concerns resurface. The weakness was exacerbated by Marvell’s dismal earnings forecast, which reignited fears that AI-driven demand might not be enough to offset broader macro pressures.

Commodity and Cryptocurrency Updates

Crude oil slipped 0.11% to $66.24 per barrel, holding just above support, though our model continues to forecast a move toward $60 as global demand concerns persist. Gold eased 0.24% to $2,919 per ounce as the dollar strengthened slightly, dulling safe-haven demand. Bitcoin fell 1.62%, closing just above $89,000. Despite the pullback, our model remains bullish on Bitcoin in the $83,000 to $77,000 range, and we continue to actively seek long entries at those levels.

Treasury Yield Information

The 10-year Treasury yield rose slightly, closing at 4.292%, up 0.63%. Yields remain dangerously close to the critical 4.5% level, where equities typically start to feel sustained pressure. A break above 4.8% would quickly shift sentiment sharply bearish, and at 5%, equity markets would likely experience a substantial correction. Treasury yields remain a key driver of equity sentiment, especially as investors weigh slowing economic growth against persistent inflation pressures.

Previous Day’s Forecast Analysis

Wednesday’s forecast projected a trading range between $575 and $590, with a bearish bias below $585. The plan favored long trades off support near $575 and shorts below $585, with $580 acting as an intermediate pivot. The forecast also warned that any break below $575 could trigger further downside toward $570, with a break below $570 accelerating declines. This setup acknowledged ongoing uncertainty around tariffs and economic data, reinforcing the need for flexibility as headlines continued to drive rapid shifts in sentiment.

Market Performance vs. Forecast

Thursday’s price action followed the forecast closely, with SPY opening near the lower end of the projected range at $575.65 before immediately breaking down to test $570, exactly as outlined in the prior day’s strategy. The bounce attempt stalled well below resistance at $578, which had been highlighted as the bias level in premarket analysis, and the subsequent close at $572.86 confirmed the bearish bias was correct. Traders who followed the plan had ample opportunity to profit from short trades initiated below $575, with the clean break to $570 offering a textbook setup. The accuracy of these levels continues to reinforce the value of the daily forecast in guiding profitable trades.

Premarket Analysis Summary

In today’s premarket analysis, posted at 7:35 AM ET, the model identified $578 as the key bias level. Below this, the analysis favored bearish pressure toward initial targets at $575 and potentially as low as $570. The upside targets were capped at $583, with a stretch target of $589 in the event of a strong reversal. The analysis correctly anticipated a confused, drifting open that would likely resolve in favor of the dominant bearish positioning if $578 failed to hold.

Validation of the Analysis

Thursday’s action validated the premarket analysis extremely well. SPY opened just below the $578 bias level, immediately breaking support at $575 and driving directly to $570, the model’s downside target. Resistance at $578 held firmly during the brief afternoon rally attempt, providing an ideal area for new short entries. This confirms the analysis’ accuracy in identifying both directional bias and key support and resistance levels, helping traders navigate a volatile session with confidence.

Looking Ahead

Friday’s primary focus will be on the monthly jobs report, a pivotal release that could set the tone for the rest of March. With Powell scheduled to speak at 10:30 AM ET, traders should brace for heightened volatility, especially if the data significantly beats or misses expectations. Given the recent string of weak economic reports, a disappointing jobs number could fuel fresh recession fears, while a surprisingly strong report could shift attention back toward inflation risks and rising rates.

Market Sentiment and Key Levels

SPY closed at $572.86, leaving the bears firmly in control. Immediate resistance stands at $575 and $578, with support now at $570 and $565. A break above $578 could spark a short-covering rally toward $580 or even $585, but any failure to reclaim $575 would likely lead to a retest of $570. A clean break below $570 opens the door to a test of $565 and possibly the August lows near $500. Sentiment remains fragile, dominated by tariff uncertainty, economic softness, and growing fears of stagflation.

Expected Price Action

Actionable intelligence from our AI model forecasts a trading range between $565 and $585 for Friday, reflecting an expanded range with high volatility expected around the jobs report. The bias leans bearish below $575, with downside targets at $570. Above $575, resistance comes into play at $578 and $580. A sustained break above $580 could trigger a powerful short squeeze, but below $570, downside momentum could accelerate quickly.

Trading Strategy

Long trades are favored on dips to $570 if buyers defend the level, targeting $575 and $578. Short trades remain attractive, particularly on failed rallies toward resistance, with downside targets at $570. A clean break below $570 would open the door to a swift drop toward $565 or lower. With VIX at 25 and expected to rise further Friday, traders should size smaller and take profits quickly to manage risk in a volatile tape.

Model’s Projected Range

The model projects a wide maximum trading range between $558.50 and $588 for Friday, consistent with a highly volatile session driven by the jobs report. SPY remains in its bear trend channel from the December highs, with $578 and $580 acting as major resistance and $570 and $565 as key support. The market is Put-dominated, signaling bearish control unless price can reclaim $585. The risk of downside acceleration remains high if $570 breaks, with $558.50 in play.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Bearish Trending Market State, with price just below MSI resistance. The MSI range is average without extended targets below, implying a weakening bear trend. The MSI opened the day in a bearish state after price fell overnight more than $7. After price tested the prior day’s lows, SPY reversed and rallied with the MSI rescaling to a wide ranging state. In this state the market is unclear about the day’s direction and as such, we do not favor initiating trades in this state. By 11:50 am price fell and the MSI rescaled lower to a Bearish Trending Market State and shortly thereafter began printing extended targets below. The MSI rescaled lower twice more reinforcing the strong bear trend. By 2:30 pm, price had found MSI support at $570.66 which was also our model’s major level. From here price rallied to close the day just below MSI resistance. MSI support is currently $570.62 and resistance is at $574.25.  
Key Levels and Market Movements:
We stated Wednesday its “probable $585 holds at least for one more test and back fills the range between $575 and $585”. We also stated, “a break of $575 will retest today’s lows if not lower” and sure enough today both pieces of information were highly accurate. A test overnight of $585 did hold and the market sold off in the wee morning hours. By the open, SPY was already trading at major support at $575. A failed breakdown right at the open just below $575 and we were long given the MSI did not have any extended targets below, even though it was in a narrow bearish state. We took first profits at the premarket level of $578 as the MSI rescaled to a ranging state and long time readers of this newsletter know we do not love trading when the MSI is in this state, knowing our edge is no better than 50/50 in a ranging state. A solid long however with a first target and stop to breakeven looking for a second target at our models major level of $580. We reached this target quickly but that is where price stalled and after three attempts to break this level, we reversed short on a triple top just below $580, looking for a first target at MSI support at $576. SPY reached this level so we moved our stop to breakeven and looked for the next level of MSI support at $573. With a second target in hand, we continued to hold our 10% runner to see if price would reach $570…another major level of support from our model. We had confidence price would move lower as the MSI rescaled lower and printed extended targets below indicating the herd was participating in the bear trend. By 2:30 pm however, extended targets stopped printing and SPY created a textbook failed breakdown, trapping late to the party shorts. We knew better than to hold on so we reversed long from this major level and took first profits at MSI resistance at $574.25. We held our runners and with a stop at breakeven, had a free trade to see if SPY would once again reach the premarket’s $578 level. SPY did not cooperate and our runners were stopped at breakeven on a quick drop back to MSI support. We contemplated entering long once again but given the 3 pm hour and the fact that the market was clearly in no mood to rally, we called it a day going three for three with two great trades and one first target trade. This is why we take 70% of our position off on a first target. We take another 20% at a second target and trail 10%. So while we only had a single target on our last trade, it was still 70% of our size in profit which padded our wallet nicely. This is how level to level trading works and while there are several derivatives of this type of trading, our goal is to achieve an extremely high win rate, capturing most of our profit at a first target, protecting our gains. And once we are green, we never go red on the day. Once again with the MSI showing us who controls the market and when and where they took control, 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 has the monthly jobs report premarket with Powell speaking at 10:30 am. These two events have the potential to move the market materially. The monthly jobs report is only second to FOMC days with respect to volatility. Given the elevated state of fear with VIX up over 15% today at 25+, we expect more fireworks tomorrow as a result. We continue to advise trading what you see as this new information is introduced to the market. Absent these or other external macro or news events, our general lean for Friday is that price will attempt to hold the 200 DMA at $570. This level was tested today a couple of times and it did hold. Perhaps there is one more test which will hold to provide a base for the market to reclaim some of this month’s decline. Historically the first two weeks of March are bullish so the markets are fighting history and at some point, it’s likely the bulls stage a significant relief rally. That said, the bulls need to at least clear $585 to have any hope of reversing the market’s course. A failure of $570 to hold and the market makes a major move lower to $555 at a minimum. While unlikely tomorrow, a break above $585 will push price toward $590, emboldening the bulls to try for more. Our model forecasts rallies will continue to be sold until price reclaims $600 OR until the trade war is suspended. The volatility we are seeing is coming primarily from the looming trade wars, which are perhaps a bit overdone. We don’t see this as the most pressing risk to the market in the near term. We see the risk of a government shutdown and the debt ceiling debate as major potential hazards in March. Until some of these macro issues are resolved, we continue to favor the bears, selling rallies to as high at $595. Above $595, there is a chance the bulls press price toward $600 so we do not favor shorts above $595. And certainly continue to seek failed breakouts or other topping patterns from major levels. April could also introduce more volatility with tariffs on our EU partners, therefore its likely this current bout of volatility will continue for some time. We suggest only initiating longs on failed breakdowns from major levels and only if the MSI is not printing extended targets below while at the same time, continuing to look for shorts from major levels with a preference for failed breakouts. 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 $587 to $600 and higher strike Calls while buying $573 and $586 Calls. This implies Dealers wish to participate in any rally on Friday to as high as $600. To the downside Dealers are buying $572 to $545 and lower strike Puts in a 3:2 ratio to the Calls they are selling/buying, implying a neutral to ever so slightly bullish posture for Friday. This positioning has changed from neutral to slightly bullish. Dealers own major downside protection and added to their Put protection with far out of the money options in case the entire market unravels.  
Looking Ahead to Next Friday:
Dealers are selling $595 to $610 and higher strike Calls while buying $573 to $594 Calls indicating the Dealers desire to participate in any rally next week to as high as $600. Dealers do not seem to believe prices will exceed $600 by next Friday indicating a ceiling to any recovery that may develop. To the downside, Dealers are buying $572 to $540 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 is unchanged from today. Dealers have added significant downside protection at much lower levels. The fear is making its way to Dealer positioning. While Dealers have been buying Calls all week looking for a rally, none of these worked out but one day. Dealers finance the purchase of options from the sale of options so they are not losing money on these trades. Dealers continue to buy Calls waiting for the rally to come. When they are right they will clean up but at least as of today, they have been more wrong than right this entire week. 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 to exercise caution given the number of unknowns affecting the market. This holds especially true for Friday with the monthly jobs report and Powell speaking. He may or may not speak to tariffs and other economic policy risks to the economy. Be sure to stay on top of news coming out of the White House, trading what you see after new information is released. The best way to do this with the highest probability of success is to seek failed breakout and failed breakdown patterns at or near our model’s major levels. SPY 1% to 2% days have become the norm this month after going more than a year last summer without a 2% losing day. Those times seem like a distant memory so we advise caution, adjusting to the current climate, being prepared to trade with the trend whenever possible, only contemplating counter trend trades when price is testing a major level and the MSI is not printing extended targets. Add a failed pattern and you will achieve the best results. This means two way trading from the “edges” using our favorite failed breakout and failed breakdown patterns. The bears have the edge over the bulls and $585 needs to be reclaimed for the bulls to have any chance of prices moving higher. A break above $585 will target $590 but $600 needs to be reclaimed for the bulls to take control away from the bears. A failure to move above $585 and price will work its way back to $570. And a break below $570, and price moves toward the August lows. Stay nimble, continuing to monitor key levels seeking to initiate entries from our model’s major levels and with the controlling party which currently is the bears. Be sure to review the premarket analysis before 9 AM ET for the day’s updates.

Good luck and good trading!