Market Insights: Wednesday, August 19th, 2026

Market Overview
US stocks snapped a three-day losing streak on Wednesday, with the Dow, S&P 500, and Nasdaq Composite each gaining roughly 0.2% after the US Treasury Department announced it would increase buybacks of long-dated government debt by at least double for securities in the 10-year to 30-year sector. That move pulled yields sharply lower, with the 10-year falling 5 basis points to 4.65% and the 30-year dropping 9 basis points to 5.19% after hitting its highest level since 2007 earlier in the week. The biggest individual stock story of the day was Moderna, whose shares surged 176% after the company reported positive late-stage trial results for a melanoma vaccine developed in partnership with Merck.

On the trade front, Trump posted late Tuesday night that he had paused the 50% Canadian tariffs for three days after reaching a tentative deal with Prime Minister Mark Carney's team, with experts noting that while the tariffs would have had limited economic impact, the pause signals meaningful USMCA renegotiation talks ahead. Adding another layer to the day, Fed meeting minutes revealed that several FOMC members favored raising interest rates at last month's meeting and warned that further hikes may be necessary if inflation doesn't cool soon.

SPY Performance
SPY opened at $770.36 and spent most of the session searching for direction without much success. The high of $772.47 came and went without generating any real follow-through, and sellers were patient enough to cap any meaningful rally attempt. Price drifted back toward the lower end of the range, carving out a low of $768.11 before settling at $769.10 — closer to the bottom than the top. That's a $4.36 spread from low to high, a modest range that suggests neither side had enough conviction to push things decisively in their favor.

SPY finished up 0.21% on the day, snapping the three-session losing streak but doing so in the least inspiring way possible. A fractional gain on volume of 33.47 million shares — below average — doesn't exactly scream institutional accumulation. The one genuinely bright spot was the VIX, which dropped 4.99% to close at 15.05. That pullback in fear is worth noting, especially after back-to-back sessions of rising volatility alongside falling prices. Still, one day of VIX relief and a modest green close don't flip the script on their own. Bulls need to see SPY hold a low, attract real volume, and close near the top of its range before this market can credibly claim the sellers have been turned back.

Major Indices Performance
The Russell 2000 led the way today, climbing 0.46% in a session that gave small-cap bulls something to feel good about. That's a meaningful move for an index that's been stuck in a frustrating holding pattern, and it suggests some appetite for risk was returning as the macro backdrop showed modest signs of stabilizing. Small-caps tend to benefit when investors feel comfortable reaching a little further down the risk curve, and today that dynamic played out.

The Dow came in right behind with a gain of 0.22%, driven by the kind of steady blue-chip performance that doesn't make headlines but keeps portfolios moving in the right direction. Defensive names with reliable earnings continued to attract quiet accumulation, and the Dow's consistency today reinforced its reputation as the steadier hand among the major indices. The S&P 500 also nudged into positive territory, keeping pace with the broader green tone across markets.

The Nasdaq brought up the rear with a 0.16% gain, which sounds modest but has to be viewed in context. With NVIDIA applying some drag on the tech-heavy index, it's actually a reasonable outcome that the Nasdaq held positive at all. The broader Magnificent Seven cohort leaned green, and that support kept the index from falling behind the pack more meaningfully. Overall, today was a quiet but constructive session — not the kind of explosive rally that rewrites the narrative, but steady enough to remind sellers that buyers haven't walked away.

Notable Stock Movements
Tesla stole the spotlight today, surging 4.23% to lead the Magnificent Seven in what turned into a mostly green session for the group. That's a significant move for a name Tesla's size, and when the most volatile stock in the cohort is also the one leading to the upside, it tends to lift sentiment across the board. A gain like that from Tesla sends an entirely different message to the tape than what this group has been broadcasting in recent sessions — and today, that message was constructive.

The Magnificent Seven had a broadly positive day overall, with the majority of names finishing in the green and only NVIDIA closing lower, slipping -0.99% to serve as the lone meaningful drag on the cohort. One red finish out of seven is about as clean a sweep as this group is capable of producing, and it stands in sharp contrast to the inconsistency and majority-red sessions that have defined this cohort lately. NVIDIA's modest decline is easy enough to absorb when the rest of the group is pulling its weight, and it did nothing to derail the positive tone across the board.

What makes today's performance notable is the broader implication for market sentiment. After several sessions where Magnificent Seven weakness actively contributed to index-level pressure, the group finally flipped the script and offered some genuine support rather than headwinds. The Nasdaq managed only a modest gain of 0.16%, so it's not like the group ignited a rip-roaring rally, but the stabilization here matters. If Tesla can hold its momentum and NVIDIA's softness stays contained, this cohort has the foundation to start acting more like a market anchor than a source of volatility.

Commodity and Cryptocurrency Updates
Crude oil dipped 0.84% to settle at $84.23, but the bigger story remains where prices are holding — well into the mid-$80s and far above levels that would make policymakers comfortable. Energy has defied expectations by staying entrenched at these elevated prices, and with supply dynamics still tight and global demand holding up, there's no obvious catalyst to push crude meaningfully lower in the near term. The longer crude camps out above $70, the more complicated the inflation picture becomes for the Fed, and that's not a dynamic markets can afford to ignore.

Gold had a standout session, surging 4.66% to close at $4,570. That's a significant single-day move and one that reinforces just how strong the bid for the metal remains. Central bank demand, macro uncertainty, and the ongoing inflation conversation continue to provide structural support, and today's jump suggests buyers aren't waiting for dips anymore — they're chasing strength. The bull case for gold isn't just intact, it's accelerating.

Bitcoin put in an impressive session as well, climbing 5.90% to close just below $68,498. After a period of grinding consolidation, this kind of move is exactly what bulls were looking for — a decisive push higher that breaks the range and reestablishes upside momentum. Demand stepped up firmly, and the tone across the crypto market shifted meaningfully to the positive. Whether this becomes the launchpad for a broader leg higher remains to be seen, but today's session was anything but quiet.

Treasury Yield Information
The 10-year Treasury yield continued its pullback today, falling another 1.13% to close at 4.650%. That's two consecutive down days for yields, and while the bull case is starting to build a little momentum here, it's important to keep perspective — we're still well above the danger zone, and celebrating feels premature.

At 4.650%, the yield sits 15 basis points above the 4.5% threshold where equities begin to feel real strain. That's a slightly better cushion than yesterday's 21 basis points, and the trend is moving in the right direction. The more important observation is that two back-to-back down days in yield territory like this can sometimes signal a near-term top forming, especially when you pair it with today's broader market calm. But "sometimes" isn't "always," and one or two sessions of retreat doesn't erase weeks of upward pressure.

The good news is that the 4.8% line — where this framework calls for accelerating selling and more serious market damage — is now 15 basis points further away than the yield level itself. That wall hasn't disappeared, but it's no longer breathing down the market's neck the same way it was just days ago. Still, a single hot inflation print or a weak Treasury auction could snap yields right back toward that level in a hurry. The 5% level remains where things get genuinely painful for stocks, and 5.2% is where a correction of 20% or more enters the picture.

What to watch now is whether this two-day pullback has real conviction behind it. If the 10-year can continue trending back toward and eventually below 4.5%, the equity market gets meaningful breathing room. If yields flatten out here and stall in the 4.6% to 4.7% range, the relief is real but limited. Direction matters more than levels right now.

Previous Day’s Forecast Analysis
Yesterday's newsletter projected SPY to trade within a range of $764 on the downside and $777 as the max upside target, with Tuesday's close at $767.36 sitting in the lower third of that range and tilting the bias clearly bearish heading into the session. The $770 level was identified as the defining pivot of the day — the line separating two very different outcomes. Bulls needed to reclaim and hold $770 to open a path toward $773, where the heaviest overhead resistance sat, with $775 capping the expected move and $776-$777 representing max upside territory requiring a strong catalyst. On the downside, $769 was the first level to defend, $768 was flagged as the most critical battleground where the heaviest support battle was expected, and a clean break there was seen as the trigger for an accelerated move toward $766 — the floor holding the setup together. Losing $766 opened $764 as max downside.

The trading strategy leaned into the bearish bias while keeping position sizing in the 75-85% range with stops held tight in the 1.0-1.25% band from entry. On the short side, a clean breakdown below $766.92 — the prior session low — was the trigger for a short entry targeting $764-$765, with stops above $769.50. A push through $764 with conviction pointed to $761-$762 as the secondary profit target. On the long side, bulls needed to reclaim $769.50 first, with a firm bounce off $767-$768 as the preferred entry and $772-$773 as the primary target, $775 as the stretch goal, and stops placed below $766. The VIX at 15.71 and rising on consecutive sessions was flagged as a meaningful signal favoring short setups, though the strategy emphasized waiting for confirmation rather than chasing momentum into support.

Market Performance vs. Forecast
Wednesday's session opened at $770.36, landing directly above the forecast's most critical pivot — the $770 line that the model identified as the defining separator between two very different outcomes. That open immediately validated the framework's level architecture and gave bulls their first real signal of the day. Price pushed to a high of $772.47, stopping just beneath the $773 overhead target the model had flagged as the heaviest resistance concentration — a near-textbook confirmation of where supply was expected to live. The framework called $773 as the level where price should want to stall, and Wednesday's tape respected that call with precision.

What the model got squarely right was the battleground zone. The forecast identified $768 as the most critical support battleground and $769 as the first level sellers needed to crack — Wednesday's low of $768.11 tested exactly that territory before buyers reasserted control and held the structure. Price ultimately settled at $769.10, sitting right inside the contested zone the framework had mapped out in detail. The rising market scenario had outlined a bounce off the $767-768 zone with $769.50 as the first resistance to clear, and while price didn't sustain a full breakout through that ceiling, the support identification proved accurate. The directional setup delivered meaningful intraday range and purposeful movement rather than the lazy chop the model cautioned against. VIX dropping 4.99% to 15.05 confirmed that the anxiety building across prior sessions began to release, consistent with the framework's read that volatility at those levels hadn't yet reached levels that derail recoveries. The model's level structure continues to prove its value as a precision roadmap, and Wednesday's tape reinforced why respecting key pivots rather than chasing momentum remains the foundation of this approach.

Premarket Analysis Summary
The premarket analysis posted at market open identified SPY spot at $767.64 in a put-dominated tape, extending the prior session's decline after $768 had given way and sellers maintained control into the close. The expected move was set at five points, signaling a tighter, more contained setup. The defining level of the day was $769 — flagged as the gate sitting right above spot and the point where the tape would begin to repair. Upside targets were set at $770, $771, $773, and $775, with $773 identified as the level bulls really needed to reclaim to flip the tone and $775 standing as the max upside and heaviest resistance overhead. On the downside, $767 was the first level to watch sitting just beneath spot, $766 was the next decision point below that, $765 was flagged as the most important level below with the heaviest battle expected there, and $762 stood as max downside. The analysis warned that the setup was tight — with spot pinned between $769 above and $767 below — and that a failure of $767 early would open the door for a quick trip to $765 and a real fight there.

The actual session delivered a significant surprise to the downside bias. SPY opened at $770.36, immediately above the $769 defining level and squarely reclaiming that gate from the first tick — flipping the tone bullish before the open bell settled. The high of $772.47 reached toward the $773 expected move top without quite tagging it, and price held above the $769 level for essentially the entire session. The low of $768.11 dipped only briefly below $769 before buyers reasserted themselves, never threatening the more serious downside levels flagged in premarket. The close at $769.10 locked in a gain of 0.21% and settled price comfortably above the prior session's close. The VIX dropping 4.99% to 15.05 confirmed the shift in tone, as the fear that had defined the prior two sessions stepped back and gave bulls just enough room to breathe.

Validation of the Analysis
Wednesday's session delivered a textbook validation of the premarket framework, with SPY's behavior at every key level confirming the analysis in real time from the opening print forward. The setup heading into the day was explicit — spot at 767.64 with 769 identified as the gate above and the level where tape repair would begin. Instead of testing the downside first, the market gapped directly through that 769 gate and opened at $770.36, immediately above the first upside target of 770. That gap higher was the day's first significant signal, and traders who understood the premarket framework recognized it instantly — a clean reclaim of 769 and 770 was the precise condition the analysis said would bring the tape to 771 quickly, and that sequence materialized without hesitation.

From there, price ran directly to a high of $772.47, stopping just shy of the 773 level that the premarket identified as the cap on the expected move top and the level bulls really needed to clear. The analysis was precise — 773 was described as the point where a clean reclaim would flip the tone, and the session stalled right in front of it, which is exactly the behavior a resistance level should produce. The 771 level served as the interim decision point just as mapped, and the close at $769.10 settled right on the reclaimed 769 level, completing the full round trip within the framework. The range from $768.11 to $772.47 stayed neatly contained between the downside and upside targets defined before the open. With the VIX dropping 4.99% to 15.05 confirming the shift in sentiment, traders who faded the open above 770, targeted 771 and 773 as resistance, and used 769 as their pivot had a fully mapped session with clean entries and logical targets at every turn.

Looking Ahead
Thursday's economic calendar is quiet, with no high-impact releases scheduled to drive directional moves. That actually gives traders a useful window to step back, assess positioning, and let the market digest whatever reaction Wednesday's FOMC Minutes triggered. After a Fed catalyst, the session that follows often tells you a lot about conviction — whether the initial move holds or fades tends to reveal how serious the market is about the new narrative.

Use Thursday's session to watch how price behaves relative to the levels that matter coming out of Wednesday. If the Minutes sparked a rally, does the market defend those gains or does it start giving them back as the dust settles? If selling was the reaction, watch for stabilization and potential dip-buying. With no fresh macro data to shift the story, price action becomes the signal — and a clean, catalyst-free session is sometimes the best environment to read what the market is actually telling you.

Market Sentiment and Key Levels
The directional bias today leans cautiously bullish, though calling it a convincing bull session would be generous. SPY managed a modest 0.21% gain on below-average volume of 33.47 million shares, which tells you the buying pressure was real enough to close green but not strong enough to inspire much confidence. The broader tape backed that up — the Dow added 0.22%, the Nasdaq ticked up 0.16%, and the Russell 2000 led the pack with a 0.46% gain, suggesting some rotation into smaller caps that's worth watching. The most encouraging signal of the day came from the VIX, which dropped 4.99% to 15.05, meaning the options market is cooling its hedging activity and volatility sellers are stepping in — that's a mild tailwind for equities heading into tomorrow.

Key resistance sits at $772.47, today's intraday high, which SPY tagged but couldn't hold through the close. A sustained push above that level with volume returning to at least average territory would be the green light bulls need to test higher ground. On the support side, $768.11 — today's intraday low — is the immediate floor to watch. A clean breakdown below that print on expanding volume would shift the short-term tone back toward neutral and open the door to the $766 to $765 area, with $760 serving as the next meaningful level below that. Gold's explosive 4.66% surge to $4,570 and Bitcoin's 5.90% jump closing below $68,498 are both flashing risk-on energy that could spill into equities if momentum holds. Yields remaining above 4.5% continue to act as a ceiling on enthusiasm, but the modest pullback in that area today is at least not adding fuel to the bearish case. Bulls are leaning forward but haven't fully taken the wheel yet.

Expected Price Action
Thursday's session brings actionable intelligence generated by our AI model, with SPY projected to trade within a range defined by $762 on the downside and $775 as the max upside target. That thirteen-point window sits just below the trending threshold but is wide enough to expect purposeful directional movement rather than lazy chop — this is not a setup for rangebound drift. With Wednesday's close at $769.10 sitting in the lower half of the projected range, bears retain a mild structural edge heading into Thursday, though the VIX dropping 4.99% to 15.05 suggests fear is fading and sellers may be losing some of their conviction.

The $769 level is the defining line in the sand — it's the most important pivot of the session and the level that separates two very different outcomes. Reclaim and hold $769 cleanly and the tape begins to repair, with $770 the next immediate target and the level that really changes tone. Above $770, $771 becomes the next decision point before $773 caps the expected move top and represents where bulls face their stiffest overhead test. Beyond that, $775 stands as max upside and the heaviest resistance on the board — reaching it would require a genuine catalyst. On the downside, $767 is the first level to watch and sits right beneath Wednesday's close — sellers pushing through there early hand the session to bears in a hurry. Below $767, $766 is the next decision point before $765 becomes the most critical battleground where the heaviest support fight should occur. A clean break of $765 could get ugly fast, with $762 serving as max downside and the floor at the bottom of the expected move. Bias leans modestly bearish given where Wednesday closed within the projected range, but the real test is whether buyers reclaim $769 and push through $770, or whether sellers crack $767 early and force a quick trip toward $765. Those two levels decide Thursday's direction.

Trading Strategy
The VIX dropping 4.99% to 15.05 is a constructive signal for bulls, as fear is actively being wrung out of the market. At 15.05, volatility is sitting in a comfortable zone that historically supports grinding upside moves, and the direction of that drop matters as much as the level itself. When the VIX falls on a quiet, below-average volume session, it often means smart money is not hedging aggressively — they're comfortable holding exposure. Keep position sizing in the 80-90% range given the calmer backdrop, and widen stop-losses slightly to the 1.0-1.25% band from entry to avoid getting shaken out by normal intraday noise. The risk environment is friendlier today than it's been in recent sessions.

In a rising market scenario, the key level bulls need to clear and hold is $772.47 — today's session high. A clean push through that level on any follow-through buying opens a long entry targeting the $774-775 zone as the primary profit target, with $777 as the stretch goal if momentum builds. The preferred entry is a confirmed bounce off $769-770 support with visible buying participation rather than chasing the open. Stops on longs belong below $768 to keep risk defined and prevent a deeper pullback from becoming a losing trade. With the VIX at a relaxed 15.05, conditions favor the bulls pressing any momentum that emerges early in the session.

In a falling market scenario, the first line in the sand is $768.11, today's session low. A clean breakdown below that level with renewed selling pressure sets up a short entry targeting the $765-766 zone, with stops placed firmly above $770 to keep risk manageable. If sellers push through $765 with conviction, the next meaningful support cluster sits around $762-763, which becomes the secondary profit target for traders running a trailing stop. Even with the VIX dropping to 15.05, complacency can get punished quickly — so respect any breakdown that develops on expanding volume, cover into support zones rather than chasing, and don't let a low-fear environment convince you that downside setups can't work.

Model’s Projected Range
SPY's projected maximum range for Thursday is $764 to $774, with the Put side dominating in an expanding band that suggests trending price action with intermittent chop. Thursday brings no economic news due out so the market will trade on technicals. SPY closed at $769.10, up 0.21%, in a relatively tight session that saw a high of $772.47 and a low of $768.11 off an open of $770.36, with trading volume coming in lower than average — a calm day overall with no real conviction in either direction. SPY remains in the $765 to $770 range that has defined recent trading, with ongoing geopolitical uncertainty continuing to keep traders cautious beneath the surface. On Thursday, the first resistance to watch is $770 — a break above that level puts $774 in play next, while a failure at first support near $765 opens the door toward $764. The long-term bull trend remains intact above $640 with SPY well above structural support. As long as price holds above key structural levels, this remains a broader dip-buying environment. Absent a catalyst, resistance sits at $770, $774, $775, $776, while support rests at $765, $764, $760, $755. With SPY closing just below $770, we favor shorting rallies near $770 until price can reclaim that level with conviction. Bitcoin surged 5.90% to close below $68,498, showing real strength on the crypto side, while the MAG stocks were mostly green led by Tesla up 4.23%, with NVIDIA the lone laggard down 0.99% — the broad strength across both leadership groups supports the idea that the rally still has underlying demand behind it. The VIX closed at 15.05, down 4.99%, suggesting a significant reduction in fear as traders grow more comfortable with current price levels and the absence of immediate macro threats. SPY closed near the middle of its trend channel, with structural support sitting just below at $765 — holding that zone keeps the near-term setup constructive.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended in a Bearish Trending Market State with SPY closing at $769.10. SPY closed just inside the MSI range near resistance at $769.14, so that level remains resistance heading into Thursday with MSI support at $768.2 serving as the floor below. Extended targets were not printing at the close, though they were visible above during premarket and again in the AM session. The session itself was a study in fading momentum as the MSI rescaled several times throughout the day. The MSI opened in a Bullish Trending state in premarket which sparked a rally into the open, but that move proved short-lived as the MSI rescaled lower into a narrow Ranging state. Before midday the MSI rescaled higher again and SPY pushed to the highs of the day with extended targets printing above, only to stall right at MSI resistance and begin a sustained decline that carried through the rest of the afternoon. The MSI held in a wide Ranging state through much of that decline before finally rescaling into a Bearish Trending state in the final hour, with SPY closing near resistance. The narrow $0.94 spread at the close reflects a market in tight consolidation rather than a market with strong directional conviction. Without extended targets printing at the close, the MSI is forecasting a sideways to possibly higher session on Thursday, though the bears are likely to maintain downside pressure. Any failure of MSI support is likely to see SPY retest the day's lows. MSI support is $768.2 with resistance at $769.14.
Key Levels and Market Movements:
Tuesday we stated, "Bulls want to see overnight price hold current levels and the MSI rescale higher with extended targets printing above," and added, "Bears want to see $767.45 cap any rally and the MSI rescale lower with extended targets printing below. If that occurs, SPY is likely to press toward lower levels beneath Tuesday's session range," while also noting, "Do not anticipate the direction — let the MSI confirm its state before committing to either side." That framework set the table perfectly for Wednesday, and while both sides had their moments, neither was able to hold control long enough to fully deliver a clean trending session in either direction.
The MSI opened Wednesday in a Bullish Trending state during premarket with extended targets printing above, giving bulls an early structural edge as price rallied into the open. But the MSI quickly rescaled lower and shifted into a narrow Ranging state, stripping away that bullish momentum before it could take hold. The bears looked to be in control briefly, but before midday the MSI rescaled higher once more and SPY made a run at the highs of the day, reaching $772.47 with extended targets printing above. That was the high-water mark of the session. Right at MSI resistance the rally failed, extended targets disappeared, and SPY began a steady decline that continued for the remainder of the afternoon. The MSI remained in a wide Ranging state through much of that selling before rescaling into a Bearish Trending state in the final hour, confirming the bears had reclaimed the narrative heading into the close. The primary trade setup was selling the rally to MSI resistance once extended targets stopped printing above and the MSI confirmed the shift lower, targeting premarket levels below as SPY pressed toward the session lows. SPY opened at $770.36, traded a high of $772.47, a low of $768.11, and closed at $769.10, up 0.21% on volume of 33.47 million shares, which came in below average. The VIX dropped 4.99% to 15.05. At minimum it was a 3-for-3 session for traders following the framework. It was a volatile but readable day with substantial setups, all identified through proper context, patience, and flexibility while leveraging the MSI, premarket levels, and market structure rather than forcing trades. The MSI continues to prove its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Thursday has light economic news so the market is likely to move more sideways than trend given the Bearish Trending at the close. But with such a narrow range it is also likely the MSI rescales overnight and a short squeeze ensues which will push price back to test higher levels. The MSI is closing in a narrow Bearish Trending state, and that narrow $0.94 spread tells the real story here. This is not a market with strong directional conviction. The bears have a modest structural edge, but the absence of extended targets at the close removes the fuel needed to drive a clean breakdown. Thursday is likely to see price test both the highs and the lows of Wednesday's session, with volume remaining thin until Friday's OPEX brings more meaningful participation back to the market.
Given the narrow Bearish Trending close with no extended targets, the downside may be measured and is likely to find support at key levels before any sustained continuation lower develops. Bears retain a slight edge, but the narrow spread means any overnight rescaling higher could quickly shift the balance. If MSI support at $768.2 fails to hold, SPY is likely to retest Wednesday's low at $768.11 and potentially press toward lower levels beneath the session range. On the other side, if the MSI rescales overnight into a higher state, price could quickly push back toward $769.14 and above. Bulls want to see overnight price hold current levels with the MSI rescaling into a Bullish Trending state, opening the door for a push toward $769.14 and potentially higher levels above. Bears want to see $769.14 cap any rally and MSI support at $768.2 fail, which would expose SPY to a retest of Wednesday's low and deeper levels beneath the day's range.
The most actionable setup in a narrow Bearish Trending MSI without extended targets is to sell rallies to MSI resistance at $769.14 if the Bearish Trending state persists and extended targets are not printing above, targeting premarket levels below as the primary downside reference. Alternatively, if the MSI rescales overnight into a Bullish Trending state and holds $768.2 with conviction, buying dips toward that level and targeting $769.14 and higher becomes the preferred approach. A Ranging state at the open is also quite possible given the narrow spread, and in that environment the highest-probability plays remain failed breakouts above $769.14 and failed breakdowns below $768.2. With OPEX on Friday beginning to exert its influence, be prepared for the MSI to rescale more aggressively as the week closes out. Do not anticipate the direction — let the MSI confirm its state before committing to either side.
The long-term bull trend remains intact above $640 and failed breakouts and failed breakdowns continue to offer the highest-probability setups. Remain flexible, avoid trading during Ranging Market States unless a clear failed breakout or breakdown presents itself, and ensure all trades are fully aligned with MSI signals. Providing real-time insights into market control, momentum shifts, and actionable levels, the MSI when integrated with our Pre-Market and Post-Market Reports continues to sharpen execution precision and elevate trade quality. If you haven't yet integrated MSI and our model levels into your process, now is the time. Contact your representative to get started as these tools are designed to support consistency and enhance performance.

Dealer Positioning Analysis

Dealers are selling SPY $774 to $786 and higher strike Calls while buying $770 to $773 Calls, indicating the Dealers' desire to participate in any relief rally on Thursday. The ceiling for Thursday appears to be $774. Notably, Dealers are not selling any ATM Puts, telling us they have no defined floor in the market for Thursday. To the downside, Dealers are buying $769 to $705 and lower strike Puts in a 3:1 ratio to the Calls they're selling, displaying concern that prices could move lower. Dealers have also reduced their hedges, implying they are confident prices may rally from current levels. Below $770 is bearish and above $774 is bullish. Should SPY fail to hold $770, the zone from $760 to $770 is well supported, which should keep prices from falling much further absent an external catalyst. Above $774, there is a wall of resistance to $780 which will cap gains as well. Dealer positioning is unchanged at bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $774 to $795 and higher strike Calls while buying $770 to $773 Calls, indicating the Dealers' desire to participate in any rally into next Friday. The ceiling for next week appears to be $775. Dealers are not selling any ATM Puts, telling us they have no defined floor heading into the end of the week. To the downside, Dealers are buying $769 to $655 and lower strike Puts in a 4:1 ratio to the Calls they're selling, displaying heightened concern that prices could move lower should support give way. Notably, Dealers have not added to their hedges, implying they continue to believe dips are buying opportunities. Remain bullish above $770, but below $769 the posture shifts bearish with chop in between. For the week Dealer positioning is unchanged at bearish. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders
With SPY closing at $769.10 and VIX dropping 4.99% to 15.05, the tape leans modestly bullish. Look for longs on a hold above $769, targeting $772. Shorts only on a break below $768, with stops tight.

Keep position sizing in check given below-average volume. Review the premarket analysis posted before 9 AM ET for any changes in the model's outlook and Dealer Positioning.

Good luck and good trading!