Market Insights: Monday, April 21st, 2025

Market Overview

Markets plunged Monday as President Trump once again lashed out at Federal Reserve Chair Jerome Powell, escalating a feud that has increasingly weighed on investor confidence. The Dow sank nearly 950 points, or 2.48%, while the S&P 500 dropped 2.38% and the Nasdaq tumbled 2.55%, as renewed political interference rattled markets already reeling from policy uncertainty and rising interest rates. Trump's latest criticism came in a Monday morning post where he mocked Powell as "Mr. Too Late, a major loser," demanding immediate rate cuts. The harsh rhetoric stoked concerns over Fed independence, just days after Powell warned that tariffs could slow economic growth and fan inflation. The broader sell-off deepened as the U.S. dollar fell to its lowest level since 2022 and Treasury yields surged. Adding to the chaos, the 30-year yield spiked to 4.9%, reflecting investor unease about longer-term inflation risks. Meanwhile, earnings season kicked into high gear with Tesla and Alphabet among the high-profile names reporting this week. Tesla extended its 2025 slide with a nearly 6% drop, while Nvidia also slumped on reports of China pushing domestic chip alternatives. Amid the turmoil, safe-haven assets outperformed—Bitcoin soared above $88,000 and gold hit a new all-time high, breaking above $3,430 per ounce.

SPY Performance

SPY closed sharply lower at $513.88, shedding 2.38% on the session. The ETF opened at $521.44, saw a modest intraday high of $521.70, but collapsed to a low of $508.46 before rebounding slightly into the close. Volume reached 65.90 million shares, indicating above-average participation during the rout. The close below $515 was a significant technical break, confirming a shift in sentiment as buyers failed to defend key support. While SPY dipped into previously identified demand zones, bulls offered little resistance, underscoring the growing dominance of sellers in the current environment.

Major Indices Performance

The Russell 2000 led to the downside, losing 2.06%, as smaller-cap names buckled under the weight of rising rates and policy fears. The Nasdaq followed with a 2.55% decline, pressured by weakness in mega-cap tech. The Dow fell 2.48%, dragged down by heavy losses in key components like Tesla and Nvidia. The S&P 500 mirrored the broader slump with a 2.38% drop. No sectors were spared as consumer discretionary and tech names bore the brunt of the selling. The absence of a defensive rotation signals that risk aversion is intensifying. With the VIX spiking to 33.84, market participants appear increasingly uneasy heading into a data-heavy week.

Notable Stock Movements

It was a sea of red for the Magnificent Seven, with every name closing lower except Netflix, which eked out a 1.53% gain. Tesla led the declines, plunging 5.76% as investors braced for earnings amid deepening concerns over demand and margin compression. Nvidia fell nearly 4% on fresh tensions with China over chip restrictions. Apple, Meta, Microsoft, Google, and Amazon all posted losses, dragged down by broader tech weakness and macro headwinds. The divergence in Netflix’s performance hints at selective optimism around content streaming, but the group as a whole remains under pressure with little near-term relief in sight.

Commodity and Cryptocurrency Updates

Crude oil dropped 1.64% to settle at $62.41, continuing its decline toward our long-term target of $50. While near-term rebounds are possible if the dollar weakens further, rising interest rates may soon stabilize the greenback, keeping oil on its downward path. Gold soared 2.91% to $3,435, smashing through prior highs as investors sought shelter from mounting geopolitical and economic risks. Bitcoin jumped 2.75% to close just above $87,300, reaffirming its role as a risk-on hedge during volatile macro stretches. Our strategy remains focused on long entries between $77,000 and $83,000, with profits taken above $85K. Price below $77,000 remains a red flag for deeper corrections.

Treasury Yield Information

Yields surged Monday, with the 10-year Treasury rising 2.08% to 4.416%. This marked a decisive reversal from recent softness and puts the market closer to the danger zone at 4.5%. A breach of that level would likely accelerate equity losses, while a climb toward 4.8% or higher could spark a full-fledged risk-off move. The bond market is clearly flashing warning signs, pricing in longer-term inflation risk and policy uncertainty. As yields rise, equity valuations become harder to justify, adding to the bearish tone already dominating the broader tape.

Previous Day’s Forecast Analysis

Friday’s forecast for Monday called for a wide trading range between $518 and $538, with a bearish lean. Resistance was marked at $532 and $535, and support zones were set at $525, $520, and $515. The strategy leaned toward short trades below $525, especially if $520 failed to hold. Long trades were considered only if price reclaimed $525 or $530. The AI model warned of increased risk under $520 and flagged the possibility of a sharp drop toward $511 if selling accelerated. Overall, the roadmap laid out a cautious stance and emphasized high volatility, recommending traders reduce size and manage risk closely.

Market Performance vs. Forecast

SPY opened at $521.44 and immediately failed to hold above the key $523 bias zone from Friday. The ETF quickly moved lower, slicing through support at $520 and hitting an intraday low of $508.46 before closing at $513.88. This price action decisively confirmed the forecast’s bearish bias and the anticipated downside break below $520. The model’s lower bound of $518 was also breached, validating the warning for a potential move to $515 or below. Short trades below $520 were rewarded, especially on the failure to reclaim $523 early in the session. The AI levels provided clear tactical zones that guided traders effectively through a volatile, downward-trending day.

Premarket Analysis Summary

In Monday’s premarket analysis posted at 8:37 AM, SPY was trading at $521.02 with a bearish bias level set at $523. The analysis noted that failure to reclaim $523 would likely send SPY lower, first targeting $520 and potentially as low as $515. It also warned that only a significant catalyst could fuel a move toward $527, though that was considered unlikely. Traders were advised to favor short entries at resistance or rejection zones, with expectations of consolidation around $520 if no catalyst emerged.

Validation of the Analysis

Monday’s session played out in textbook fashion according to the premarket blueprint. SPY opened just above $521 and was immediately rejected near the $523 bias level. The predicted downside targets of $520 and $515 came into play swiftly, with SPY bottoming at $508.46—well below even the bearish end of the model’s range. There was no meaningful upward push, validating the short bias. Traders who followed the recommendation to short below resistance were rewarded, especially as the market failed to find footing even near traditional support zones. The premarket levels gave traders early clarity on risk and helped navigate the sharp decline with precision.

Looking Ahead

Tuesday brings commentary from several FOMC members, which could further stir rate expectations and market sentiment. With the VIX already elevated and the market on edge, traders should brace for more volatility. Wednesday’s PMI and Thursday’s Unemployment Claims will also weigh heavily, especially if the data challenges the Fed’s current stance. Absent a dovish pivot or strong economic beat, the path of least resistance remains lower.

Market Sentiment and Key Levels

SPY closed at $513.88, deeply below the critical $535 battleground, reinforcing a bearish sentiment. Support now lies at $510, $507, and $505, with a hard floor expected at $500. Resistance sits at $516, $520, and $524. The bulls are decisively out of control unless price can reclaim $520 and close above $525. If $510 breaks, we could see rapid downside toward $500 and even $495. Conversely, a sustained move back above $520 would likely set up a test of $530. Macro forces—tariffs, bond yields, and Fed jawboning—remain in the driver’s seat. With earnings season ramping up, narrative shifts could come fast and hard. Volatility is expected to remain high, so traders should keep a close eye on these levels.

Expected Price Action

Our AI model forecasts a trading range of $505 to $525 for Tuesday, signaling an expansive band and the likelihood of further trending price action. The bias remains bearish with SPY well under critical resistance and no obvious catalyst in sight. If bulls can reclaim $516 and $520, we could see a move to test $524 and even $530. However, if $510 fails, we anticipate a drop toward $507, $505, and possibly $500. This is actionable intelligence. The VIX at 33.84 underscores the risk of violent reversals and extended moves. Traders should focus on setups around major levels and be alert for failed breakdowns or breakouts as clues to intraday direction. Until SPY reclaims $535, sellers remain firmly in control.

Trading Strategy

Traders should look for short setups below $516 or on failed breakouts near $520 and $524, targeting $510 and $507. If $510 breaks, downside could accelerate toward $500. On the long side, a hold above $510 opens potential upside back to $516 and $520. Above $520, a back test of $524 becomes viable, but confidence remains low until bulls retake $530. Tight stops are essential with the VIX near 34, and smaller position sizes are recommended in this high-volatility regime. Focus on high-probability entries and trade with the trend rather than against it. Avoid fighting breakdowns or chasing failed breakouts, and use protective stops around model levels.

Model’s Projected Range

The model’s projected range for Tuesday is $502.50 to $525.50, with the Put side continuing to dominate. This implies ongoing weakness, punctuated by periods of consolidation within a narrowing—though still relatively broad—range. Expect two-way trading to persist until an external catalyst provides clear directional momentum. Any news from the administration perceived as market-hostile could trigger further declines. SPY closed at $513.88, well below the key $535 level, which now serves as a critical battleground favoring the bears. Bulls remain on the back foot until $535 is reclaimed. While dip-buying was evident today, it's unclear why $508 attracted buyers—perhaps signaling a short-term bottom, though the broader market remains vulnerable. Rallies continue to be sold, and while we anticipate a sharp counter-trend rally that could test the $565–$585 zone, our models view this area as an opportunity to significantly reduce long exposure, as the year’s lows are likely not yet in. Historically, a retest of April lows tends to materialize 4 to 16 weeks after the initial bottom. Protective strategies or trimming exposure near stronger resistance zones is advisable. As earnings season progresses, expect many companies to cite tariffs as a headwind in their guidance, adding to the volatility already driven by administration policy. Key Technical Levels for Tuesday: Resistance: $516, $520, $524. Support: $510, $507, $505, $500. With SPY trading below the $535 threshold and limited news expected Tuesday, choppy price action is likely. Remaining below $520 increases the odds of a retest of April’s lows. Conversely, a sustained push above $520 could lead to a back test of $530 and potentially $535. Resistance at $535 remains firm, and a decisive move above it would be a meaningful bullish signal, possibly opening the door to $540. However, any progress will likely be gradual and contested. Bulls must reclaim $585 to firmly regain control. Macro Drivers: Markets remain tethered to developments out of the White House. Tariffs, bond yields, Powell, and inflation continue to be the dominant forces and are expected to drive sentiment over the next 90 days. The VIX closed at 33.84, reflecting elevated fear and the potential for further downside. The broader bearish trend channel from the December highs remains intact, with current price action mid-channel. While short-term moves in either direction are possible, the range is expected to hold, with resistance near $555 and support around $465. In this volatile landscape, we continue to recommend nimble positioning and preparedness for sharp shifts in direction. 

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Bearish Trending Market State, with price closing well below support turned resistance. The range is narrow with extended targets printing below implying a strong bear trend but with a narrow range, one which is seeking a bottom. Overnight, price gapped down and the MSI rescaled to a bearish state with price trading at $520 until the open. At the open extended targets started printing which saw price fall materially with the markets down over 3% at one point. Extended targets printed all day even into the close but the MSI did not rescale lower and as a result, price found at least an interim low at $508 and rallied into the close. Currently, MSI resistance stands at $520.71, and higher at $523.25.
Key Levels and Market Movements:
On Thursday, we noted: “After a three-day weekend, anything can happen—we could easily wake up to SPY up or down $10.” We also said, “If $520 breaks, expect an elevator down,” and finally, “If SPY first retests $520 and fails there, brace for a sharp leg lower—possibly toward $500 or beyond.” With this game plan set four full days ago, you might have wondered: how accurate can this model really be? Well, today gave us the answer—once again, the plan was spot on. As always, we followed it to the letter, supplementing it with our premarket analysis. At the open, SPY was trading right at our $520 line in the sand. With extended targets already printing during the premarket, we had zero interest in going long. The setup was clear: SPY had nowhere to go but down. Sure enough, right out of the gate, extended downside targets began triggering, and we knew it was lights out for the bulls. We looked to our premarket levels for the first target and chose $515 to lock in some gains. But with extended targets in play, we held runners to see if $500 was possible, per Thursday’s post-market roadmap. Given the narrow MSI, we knew we’d need to find a smart level for a second target since price was pushing below our recent zones. Letting price action guide us, we chose $510 to peel off another 20%, holding the final 10% in case $500 came into view. That deeper move didn’t materialize. A double bottom at $508.75 signaled exhaustion, so we closed the position. We considered going long, but with extended targets still printing, there was no way we’d risk even $1 on a counter-MSI trade. Price did bounce about $5, but we were content to call it a day—banking a monster trade and setting the tone for the week. We stuck to our core mantra: have a solid plan, execute with discipline, and let the MSI and model levels guide every decision. MSI reveals who’s in control, when control shifts, and where the key actionable levels lie—empowering precise entries and exits. Paired with our model levels and daily strategy, it keeps us aligned with dominant market forces. The results speak for themselves: consistent, high-precision execution that helps traders avoid traps, stay in sync with momentum, and take profits with confidence. We strongly recommend integrating MSI into your trading process. Combined with a structured game plan, it becomes a powerful engine for long-term performance.
Trading Strategy Based on MSI:
Tuesday brings no scheduled economic data, but with the White House on the rampage, anything can happen. Earnings season continues to heat up, with Tesla set to report—a potential tone-setter for the broader market. Boeing, for example, reports Wednesday before the open and may address China’s cancellation of aircraft orders, which could further stoke current volatility. While the banks have held up well so far, we’re now deep in the heart of earnings. As more companies speak on tariffs and their impact on margins, those risks become more tangible. Barring any surprise headline, we expect Tuesday to bring a slower, more consolidative session—with bursts of trending action—until a true catalyst emerges. Absent a macro driver, our lean is for SPY to attempt a retest of $520. Reclaiming that level is a prerequisite for any move toward $535. A failure at $520, however, sends price back to Monday’s lows. If we test those lows before a $520 retest, they’re unlikely to hold, and SPY likely continues toward $500—on the path to the April 7th low at $481.80. Just like last week, resistance above $535 remains heavier and more complex than the support below $500. If $500 breaks, expect acceleration toward $480. If $535 breaks, any move higher will likely take the form of a slow, deliberate stair-step climb. Control remains firmly with the bears. Bulls won’t regain any traction unless they first reclaim $520—and then $535. Caution is warranted. As always: trade what you see. Lean on the MSI and stay nimble. The MSI updates in real time, revealing intraday structure and momentum shifts so you’re not anchored to stale narratives or outdated assumptions. Heading into Tuesday, two-way trading remains advisable—focus on failed breakouts and breakdowns. Avoid trading against extended targets or fighting a wide MSI range. The Premarket Report provides up-to-date data and AI-driven insights to shape your strategy. The MSI highlights real-time momentum shifts, while our model levels offer high-probability targets and precise entry zones. Together, they help keep you aligned with dominant market forces and avoid costly missteps. If you're not already using these tools, now’s the time. Connect with your rep—they’re game-changers in environments like this.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling $529 to $555 and higher strike Calls while buying $514 to $528 Calls indicating the Dealers desire to participate in any rally on Tuesday. To the downside Dealers are buying $513 to $490 and lower strike Puts in a 3:2 ratio to the Calls they are selling/buying, implying a neutral to slightly bullish posture for Tuesday. Dealer positioning has changed just slightly from extremely neutral/slightly bullish to slightly bullish.   
Looking Ahead to Friday:
Dealers are selling $531 to $560 and higher strike Calls while also buying $514 to $530 Calls implying the Dealers desire to participate in any rally this week. To the downside, Dealers are buying $513 to $435 and lower strike Puts in a 2:1 ratio to the Calls they’re buying/selling. This reflects a neutral to slightly bullish outlook for the week. Dealer positioning has changed from bearish to neutral/slightly bullish. Dealers were ready for today’s market rout and while they are still loaded with protection, they seem to be signally a relief rally may be likely this week. 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 $513.88 and the VIX now elevated at 33.84, traders should maintain a defensive posture and prioritize risk management. Consider long trades if SPY holds above $510, targeting $516 and $520, while remaining nimble. Short trades are actionable below $510 or on failed breakouts near $520 and $524, with potential downside toward $507 and $500. Reduce size in this volatile backdrop and keep stops tight, especially near resistance zones. Monitor Treasury yields and Fed commentary for potential macro shifts. Remember to check the premarket analysis posted before 9 AM ET for the latest model guidance and updated Dealer positioning.

Good luck and good trading!