Market Insights: Monday, April 7th, 2025

Market Overview

Stocks spun wildly Monday as investors endured yet another turbulent session, with tariff-driven headlines jerking the market back and forth throughout the day. The Dow shed 350 points, or 0.91%, while the S&P 500 slipped for a third straight session, closing down 0.24%. The Nasdaq managed to eke out a 0.10% gain after repeatedly flipping between red and green. At one point, all major indices had rebounded sharply off the lows, thanks to social media speculation that President Trump might pause tariffs for 90 days. However, the White House swiftly denied the rumor, calling it fake news and killing off the rally. Later in the day, Trump doubled down, warning China that if it didn’t lift its 34% retaliatory levies on U.S. imports, he would slap on an additional 50% tariff starting April 9. The uncertainty around tariff escalation kept investors on edge and sparked whipsaw moves. Wall Street heavyweights began to voice concern, with JPMorgan CEO Jamie Dimon cautioning about inflation and slowing growth, while BlackRock’s Larry Fink declared the economy might already be in recession. Even longtime Trump supporter Bill Ackman urged a tariff freeze to open up space for negotiations. But the administration showed no signs of pulling back. White House trade advisor Peter Navarro penned a Financial Times op-ed insisting the tariff policy is “not a negotiation,” asserting the approach would “fix” the global trade system. With little clarity and growing fears of a prolonged economic slowdown, markets were left directionless, finishing the day mixed after an early plunge and a midday rebound both failed to hold.

SPY Performance

SPY ended the day down just 0.24% to close at $504.08, a remarkably small loss considering the dramatic $41.37 intraday range. SPY opened at $488.85, briefly tagged $481.80 before rebounding sharply to hit a session high of $523.17, then faded late to finish slightly below the prior close. Volume exploded again, with 234.5 million shares traded—five times the average—underscoring the magnitude of the volatility and the uncertainty in the market. Despite closing near flat, SPY flirted with bear market territory overnight before recovering intraday, only to be dragged back down as the final hour sell-off took hold.

Major Indices Performance

The Nasdaq led the way with a 0.10% gain after staging a dramatic comeback from steep morning losses, helped by strength in Nvidia and a partial rebound in other tech names. The S&P 500 dropped 0.24%, still struggling under the weight of persistent trade fears. The Dow was the weakest performer, sliding 0.91% as it lost 350 points, weighed down by industrials and financials. Small caps were obliterated again, with the Russell 2000 down 5.33%—one of its worst single-day performances in years. Defensive sectors provided no cover as broad-based selling continued, and volatility remained extreme. With tariffs and recession talk dominating, traders lacked conviction in any sustained direction.

Notable Stock Movements

It was a wild and mixed session for the Magnificent Seven. Apple was the worst performer, tumbling 3.7% amid concerns about its China exposure and supply chain disruptions. Tesla and Microsoft also ended in the red. On the flip side, Nvidia led with a 3.53% gain, continuing its leadership role as traders rotated selectively into high-conviction tech. Meta and Amazon both rebounded modestly, while Google closed near flat. These mixed moves reflect the tug-of-war between algorithmic selling and opportunistic dip-buying across megacaps, though the group overall remains under pressure.

Commodity and Cryptocurrency Updates

Crude oil slid another 1.56% to $61.02 as the commodity continues its freefall. Our model had been forecasting a drop toward $60 for months, and with today's intraday move to $58.95, that target was achieved. The move reflects increasing concerns about global demand destruction driven by worsening trade relations. Gold also declined, losing 1.16% to settle at $3,000 even as investors sought clarity amid the chaos. Bitcoin bucked the broader risk-off mood, rising 0.15% to close just above $78,900. We remain buyers of Bitcoin between $83,000 and $77,000, using it strictly as a long-only trading vehicle with profit-taking targets above $85K.

Treasury Yield Information

The 10-year Treasury yield surged 5.48% to close at 4.209%, rebounding sharply after Friday’s flight-to-safety rally. While still under the red-alert level of 4.5%, this kind of spike hints at potential market instability ahead. Yields above 4.8% typically trigger equity selling, and if they climb to 5% or more, we expect a 20%+ correction. For now, the 4.2% close suggests rising uncertainty about the Fed’s path, inflation pressure, and the broader economic outlook.

Previous Day’s Forecast Analysis

The prior forecast called for a wide trading range of $480 to $525 with a firmly bearish bias unless SPY could reclaim $520. The model anticipated strong resistance at $510, $513, and $519, with limited support below $500 and $494, and a major magnet at $475 if selling intensified. The outlook emphasized that momentum favored bears and highlighted failed breakouts near resistance as ideal short setups. Traders were warned to avoid dip-buying and instead focus on shorting rallies, particularly if SPY failed to hold above $520.

Market Performance vs. Forecast

SPY’s wild ride on Monday closely mirrored the forecast’s expectations. After opening at $488.85, it plunged to $481.80—just above the lower edge of the projected range—before ripping higher past $520 and briefly tagging $523.17. Ultimately, the rally fizzled as SPY faded back to close at $504.08. This broad sweep through the entire projected range of $480 to $525 validated the forecast’s bearish lean and volatility outlook. Resistance levels at $510 and $513 proved sticky, and the late-day rejection confirmed that upside momentum was fleeting. Short trades from resistance zones and reversals around $520 were highly effective, showcasing the accuracy of the model’s projected range and strategy guidance.

Premarket Analysis Summary

In Monday’s premarket analysis posted at 7:21 AM, SPY was trading at $496.46 and set up for a potential short-term recovery rally. The analysis projected upside targets at $500, $502, and $505, conditional on holding above $495. If $495 failed, downside levels at $490 and $485 were expected to come into play. The commentary urged caution on shorting intraday, warning that rallies could be sharp and sudden—a spot-on observation given the violent swings that followed.

Validation of the Analysis

The day’s price action validated the premarket read with remarkable accuracy. SPY stayed above the $495 pivot early on, triggering the expected move to $500 and $502, before briefly piercing $505. From there, it reversed as projected, slipping back under $505 and eventually closing around $504. The warning against shorting intraday proved prescient—aggressive rallies and reversals made shorts difficult unless entered at resistance. Every major level outlined in the premarket analysis played a role in guiding price action, and traders who respected these levels were well-positioned to capitalize on both the upside and the late-day fade.

Looking Ahead

Markets enter Tuesday with no scheduled economic events, giving traders a breather before the action picks up later in the week. The FOMC Minutes on Wednesday will provide key insights into the Fed’s thinking, particularly in light of Powell’s tariff comments. Thursday’s CPI release will likely move markets, especially with inflation back in focus. Friday wraps up with PPI and the University of Michigan sentiment report—potentially unfriendly prints for the administration. Expect volatility to ramp back up midweek.

Market Sentiment and Key Levels

SPY closed at $504.08 after another dramatic session, still sitting below its 200-day moving average and deep within a steepening bear trend channel. Market sentiment remains bearish, despite the strong intraday bounce. The rally failed to hold key resistance zones, and sellers reasserted control into the close. Resistance now stands at $508, $512, and $517, while support levels are at $500 and $498. A breakdown below $498 could quickly trigger a move to retest the $481–$485 zone. Bears remain in charge unless SPY can reclaim $535 and build momentum above it.

Expected Price Action

Our AI model projects a wide trading range of $480 to $530 for Tuesday—another signal of trending action ahead. The model continues to carry a bearish bias, but with room for fast-moving rallies. If SPY holds above $500, a push toward $508 and potentially $512 is likely. However, any failure at $500 opens the door to $498 and $485, and possibly a full retest of today’s lows. This is actionable intelligence and reflects a high-volatility, low-confidence environment. Bulls must reclaim and hold above $512 to have any chance at shifting momentum. Shorts remain favored below resistance, and any move below $500 should be watched closely for acceleration.

Trading Strategy

Tuesday should be treated as another high-volatility, two-sided trading day. Short setups are preferred at $508, $512, or $517, targeting $500, $498, and $485 if breakdowns resume. Long trades may work if SPY holds above $500 and reclaims $508 with strength, targeting $512 and $517—but stops must be tight. The VIX remains elevated at 47, signaling extreme uncertainty and continued downside risk. Traders should reduce position sizes and use wider stops to account for wild swings. This is not the time for aggressive dip-buying unless confirmed by strong reversals and volume.

Model’s Projected Range

The model’s maximum projected range is $476.75 to $530.75, with the Put side dominating in a wide range suggesting trending price action on Tuesday. SPY closed at $505 after another wild session, with price swinging over $40 intraday. These extreme ranges are nearly impossible to predict or trade effectively. Volume surged to five times the average, highlighting the intensity of the move. Key resistance levels are now at $508, $512, and $517, while support sits at $500 and $498. A break below $498 could open the door for a retest of today’s lows—and potentially much lower. Conversely, a push above $512 leaves little resistance before $517. The $505–$512 zone aligns with what we’d consider a normal range under our model, but confidence in these levels holding is extremely low given the current external pressures on the market. Despite the massive volume, several of our systematic, automated strategies have scaled down drastically—currently allocating less than 1% of our book. SPY briefly entered bear market territory overnight, dropping more than 5% before recovering to close slightly higher. Tariffs and inflation remain dominant market drivers, with little indication that the downtrend will ease without clear guidance from the current administration that these issues will be addressed or negotiated away. The VIX spiked as high as 60 before settling at 47. Until we see a VIX close below 35, we expect continued downward pressure. Rallies should be sold, as bulls currently have no control of the market. SPY came close to testing the next major downside target at $475—a level that could be magnetized if today's lows are breached. We do not recommend buying dips under current market conditions. The broader bearish trend channel stemming from the December highs has once again broken to the downside and will likely need to be redrawn shortly. SPY is now trading beneath the lower boundary of the channel, forming a steeper and more volatile bearish formation. While this channel allows for movement in both directions, price action is expected to remain contained within it in the near term. For now, momentum is clearly in the hands of the bears.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a Ranging Market State, with price closing mid-range. The MSI range is wide indicating a market that is confused. Overnight price fell over 5% in a tariff sell-off that continues to be unrelenting. The MSI rescaled lower in a bearish state to a very wide bearish state but did not print extended targets during the premarket. That was a clear sign that the herd was not participating in the sell off to the lows of the day. Just after the open, SPY rallied hard on false news that the White House would pause implementation of tariffs and the MSI rescaled several times higher to a bullish state. But that news was soon debunked by 10 am and the MSI rescaled to its current Ranging State and remained there the rest of the day. Currently MSI resistance is $513.12 and support is at $493.01. 
Key Levels and Market Movements:
On Friday, we stated: “We expect continued selling pressure into Monday, with targets at $500 and possibly $495.” We also noted: “Sell rallies into MSI resistance… including shorting any move up toward $520–$530.” Finally, we said: “We will only consider longs on failed breakdowns.” Today was an incredibly difficult day to trade, with massive moves unfolding in mere minutes. But we had a plan—and we stuck to it. Ten minutes after the open, SPY set up a textbook failed breakdown off the premarket lows. $485 was both our model’s premarket support and MSI support, so we entered long, targeting MSI resistance at $503.85. News of potential tariff relief hit the wires, and within 30 minutes we reached our first target, banking profits at $503.85 on 70% of the position. Given the strength of the move, we held runners with a stop at breakeven, aiming for the $520–$530 short zone. As the MSI rescaled into a bullish state, we took a second target at $517, the next MSI resistance level. SPY pushed even higher with the MSI rescaling again, but with no extended targets and a narrow MSI range that lasted just four minutes, SPY set up another textbook failed breakout. We reversed short at $515, looking for a first target at $505—premarket resistance turned support. With our stop at breakeven, we were protected and held for MSI support at $493. Given the MSI was in a ranging state—and since we generally avoid trading in that condition—when SPY formed a double bottom at $494, we exited our runners and called it a day. Two clean trades before noon on a wild, high-risk session that could rattle even seasoned traders. We wouldn’t fault anyone for sitting today out. But once again, our big gains came from having a solid trading plan, following it with discipline, and letting the MSI and our model’s levels guide every decision. The MSI reveals who's in control, when control shifts, and where key actionable support and resistance levels lie—enabling precise entries and exits. When combined with our model’s levels and daily strategy, it consistently keeps us aligned with dominant market forces. MSI delivers this level of precision day in and day out—helping traders sidestep danger, stay in sync with momentum, and take profits with confidence. We strongly recommend integrating the MSI into your trading approach. Paired with a well-structured plan, it can significantly elevate your long-term performance.
Trading Strategy Based on MSI:
Tuesday brings no material economic data, but the tariff situation remains highly volatile. The White House is once again threatening to double tariffs on China unless Beijing rolls back the 34% tariffs announced Friday. China is unlikely to capitulate, and there's a real possibility the administration follows through—potentially triggering another violent market reaction. While we’d like to believe SPY is in the midst of a relief rally, these are truly unprecedented conditions—among the most extreme and volatile in modern times. With dramatic swings happening minute to minute, having a directional lean is almost pointless. This is when you must trade what you see using the tools we provide. Still, given the nature of this newsletter, we’ll offer some guidance for Tuesday. Broadly, a relief rally appears to be underway. Bulls are attempting to build a base between $503 and $510 for a potential push to $535—a level that must be reclaimed for any meaningful recovery to take shape. That said, if today’s lows break, there’s little technical support to prevent a deeper slide. Perhaps today marked a capitulation event: massive volume, VIX above 60. But these aren’t normal conditions, and what worked in past markets simply doesn't apply here. As we said Friday, “until the VIX closes below 35, we are not looking to catch a falling knife.” We expect two-way trading again Tuesday, and like today, we’ll only consider longs on failed breakdowns. Our core strategy remains: sell rallies into MSI resistance or major model levels—ideally between $520–$530—or look to get short again if $500 breaks. The bear trend is intact, and the path of least resistance continues to be lower. Without a major external catalyst, we anticipate further selling pressure. If today’s lows give way, there’s little standing in the path of a move down to $475. As we mentioned Friday, once full-blown capitulation occurs, a sharp rebound toward $535—or beyond—is likely. But predicting exactly when that happens is impossible. That’s why it’s essential to rely on the premarket report, which incorporates the latest data and AI analysis for the most accurate, up-to-the-minute guidance. And intraday, the MSI remains the best tool for navigating this chaos. If it stays bearish and continues printing extended downside targets, we’ll stay sidelined on longs. But if a surprise rally triggers a short squeeze, we’ll adapt—trading what we see and staying flexible. Our model’s projected low is $475, which marks a 20%+ correction. While the market is overdue for a pause, there’s still no sign of lasting stability. The bears remain firmly in control and will likely continue selling every rally attempt. Keep watching the MSI. It offers critical insights that help traders stay aligned with the dominant trend. Respect extended targets—they reflect strong herd behavior and conviction-driven momentum. Use the MSI alongside our model levels to stay on the right side of the move. If you're not already using these tools, connect with your rep—they're game changers in navigating this kind of volatility.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling $505 to $533 and higher strike Calls while also buying $530 Calls indicating the Dealers desire to participate in any rally above $530, while also believing price will not move beyond $520 on Tuesday. To the downside Dealers are buying $504 to $480 and lower strike Puts while also selling $490 and $480 Puts in very small size in a 1:1 ratio to the Calls/Puts they are buying/selling, implying a neutral  posture for Tuesday. This positioning has changed from very bullish to neutral.   
Looking Ahead to Friday:
Dealers are actively selling Calls from $540 to $570 and beyond, while buying $505 to $539 Calls signaling their desire to participate in any relief rally this week. Dealers have bought large quantities of Calls which reinforce this belief. Dealers believe either tariffs will be negotiated or a relief rally is overdue and price will rally this week. To the downside, Dealers are buying Puts from $504 to $445 and lower in a 1:1 ratio to the Calls they’re buying/selling. This reflects a neutral to slightly bullish outlook for the week. Dealer positioning is unchanged staying bullish/neutral. Dealers still hold large amounts of downside protection but seemingly they are starting to price in the possibility of a short covering rally this week. Like we said Friday, “At some point the market will put in a two or three day relief rally”. We believe this rally will be sold and continue to advise doing so unless something macro changes our external view. 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

The market plunged today before staging a recovery on what appeared to be “fake” news. While a relief rally has been long overdue—and the market looks eager to reclaim some lost ground—our model suggests the selloff may not be over. It views the current volatility as just the early stages of an escalating trade war, with further retaliatory moves likely. Looking ahead to Tuesday, a break below $505 could open the door to $485, and potentially even $475, as downside momentum builds. Although a brief consolidation or a relief rally toward $520 is possible, we continue to favor selling into strength rather than fighting the prevailing downtrend. Bulls should remain on the sidelines unless $535 is convincingly reclaimed—an outcome that appears unlikely in the near term. Capital preservation remains paramount. We urge traders to stay cautious: trade small, maintain downside protection, and remain flexible. In this environment, your edge lies in reacting to price, not predicting it. Focus on failed breakout or failed breakdown setups at key technical levels, particularly those confirmed by the MSI. These often present the most favorable risk/reward opportunities. Counter-trend trades should be limited to instances when price is testing major levels and broader conditions align. Stay nimble. Stay disciplined. The bears remain in control—for now—but sentiment can shift quickly. As always, check our premarket analysis before 9:00 AM ET for updated levels and actionable signals.

Good luck and good trading!