Market Insights: Friday, June 13th, 2025

Market Overview

Stocks dropped sharply on Friday as escalating conflict between Israel and Iran sent shockwaves through global markets, spiking oil prices and pushing investors toward safe-haven assets. The Dow plunged nearly 1.8%, shedding almost 800 points, while the S&P 500 lost 1.1% to close below the critical 6,000 level for the first time this week. The Nasdaq followed suit, sliding 1.3%, with selling pressure intensifying into the afternoon after Israeli officials confirmed that dozens of Iranian missiles had been launched. Iran’s barrage was in retaliation for what Israel called a “preemptive strike” on Iranian nuclear targets. Crude oil rallied more than 7%, briefly touching gains of nearly 14% before retreating, while gold climbed 1.5% as investors moved into defensive positions. Prime Minister Netanyahu stated Israel’s operation would continue “for as many days as it takes,” anticipating multiple waves of Iranian retaliation. President Trump urged Iran to negotiate, warning on social media that failure to do so would lead to further consequences. Meanwhile, Iran warned it may target U.S. assets, prompting Secretary of State Rubio to caution against further escalation. These geopolitical shocks came just as markets were processing domestic volatility, with Trump hinting at fresh auto tariffs and repeating calls for a jumbo Fed rate cut. While investors had previously shown resilience to policy and inflation news, Friday's developments created a clear flight from risk that dominated trading into the close.

SPY Performance

SPY fell 1.12% to close at $596.99 after opening at $598.22. The ETF hit a session low of $595.50 before a shallow intraday bounce topped out at $601.85. Volume surged to 84.36 million shares, well above average, as traders reacted to the geopolitical fallout in the Middle East. Despite an early rally attempt following favorable sentiment data, SPY couldn’t sustain momentum and broke decisively below the key $600 level. The failure to reclaim that line into the close suggests weakening technical strength and raises the risk of further downside, especially as volatility picks up heading into the weekend.

Major Indices Performance

All major indices posted heavy losses on Friday, with the Dow leading the declines, dropping 1.79% in its worst session since March. The Russell 2000 followed closely with a 1.78% loss, signaling broad-based selling beyond the large-cap names. The Nasdaq shed 1.30% amid weakness in tech stocks, while the S&P 500 slipped 1.12% to close under 6,000, a critical psychological level. Markets initially responded positively to softer inflation expectations and improving consumer sentiment data from the University of Michigan but quickly reversed as headlines from the Middle East stole investor focus. Defensive sectors outperformed slightly, but widespread risk aversion defined the session.

Notable Stock Movements

It was a red day for the Magnificent Seven, with the exception of Tesla, which gained 1.96%, standing out as the lone gainer in the group. Nvidia led the losers, falling more than 2.09%, and was joined by Apple, Microsoft, and others in a broad tech selloff. The divergence highlights Tesla's unique resilience amid sector weakness, possibly benefiting from the defensive rotation into select growth names. However, the overall trend reflected a shift toward caution, with investors rotating out of high-beta tech in response to rising geopolitical tensions and surging energy prices.

Commodity and Cryptocurrency Updates

Crude oil surged 7.98% to close at $73.12, marking its highest level since January as fears of broader Middle East conflict intensified. This move reversed weeks of downward pressure and sent energy markets into a short-term rally mode. Our model still forecasts longer-term downside toward $50, and we remain buyers at those levels, but as today showed, this is the reason we do not short oil. There is simply too much geopolitical risk, even if our models suggest prices will move lower. Gold climbed 1.39% to $3,452, finding support as the dollar weakened and investors rushed for safety. Bitcoin slipped another 0.87%, ending just above $105,059. Our stance remains unchanged: accumulate between $83,000 and $77,000, and avoid entries below $77,000 where risk increases substantially.

Treasury Yield Information

The 10-year Treasury yield rose 1.31% to close at 4.413%, lifting off recent lows as investors reacted to rising inflation expectations and geopolitical turmoil. While still below the red-flag 4.5% level, this uptick serves as a reminder that yields could easily reaccelerate. A break above 4.5% could pressure high-growth equities, and any push toward 4.8% would likely begin to unravel the current bullish structure in equities. Traders are watching this level closely, particularly as uncertainty around global conflict and Fed policy adds pressure to bonds.

Previous Day’s Forecast Analysis

Thursday’s forecast projected a bullish range between $600 and $606, favoring long trades above $600 with targets at $605 and $610. The model warned that failure to hold $600 could expose SPY to moves toward $595 and $590. With Friday’s macro backdrop in flux, our strategy advised staying nimble and tightening stops near resistance zones. Volatility was expected to increase given the consumer sentiment data and external geopolitical catalysts, with our model favoring long setups above $600 but highlighting the risk of reversals around $605 or breakdowns below $599.

Market Performance vs. Forecast

Friday’s market failed to hold the bullish bias above $600 and instead broke down sharply. SPY opened at $598.22, rallied to $601.85, and then reversed course to close at $596.99. The price action violated the lower end of the expected range and ended below key support, confirming that bearish risks materialized despite early strength. While the premarket model anticipated a recovery if $600 was reclaimed, SPY’s inability to hold that level provided clean short entries for traders watching for breakdowns. The day reinforced the importance of the $600 level and validated the model’s call for a possible move toward $595 if support failed.

Premarket Analysis Summary

In Friday’s premarket analysis posted at 8:47 AM, SPY was trading at $598.63 after an overnight drop driven by geopolitical concerns. The bias level was set at $600, with upside targets at $602.25 and $605 if a recovery gained traction. On the downside, a rejection at $600 would target $595, with short entries favored in that scenario. The note emphasized potential for an early bounce but advised caution around the $600 level as a decision point. The sentiment leaned cautiously bullish unless $600 failed to hold.

Validation of the Analysis

Friday’s trading closely validated the premarket outlook. SPY failed to sustain a breakout above the $600 bias level, briefly touching $601.85 before reversing and closing at $596.99. The rejection of $600 confirmed the premarket warning, and the target of $595 was nearly met as SPY fell to an intraday low of $595.50. Traders following the analysis had clear short opportunities once $600 was rejected, and those who avoided early long entries without confirmation above that level were spared unnecessary losses. The analysis once again proved to be a reliable framework for navigating volatile market conditions.

Looking Ahead

Next week kicks off with a quiet Monday, but Tuesday brings Retail Sales data, a report that could influence rate expectations if it comes in hot. More impactful, however, will be Wednesday’s dual release of Unemployment Claims and the FOMC decision, both of which have market-moving potential. With Friday’s close highlighting growing investor unease, traders should prepare for a volatile midweek session and manage risk accordingly.

Market Sentiment and Key Levels

SPY closed Friday at $596.99, decisively below the key $600 level, signaling a shift toward more bearish sentiment as geopolitical concerns trumped inflation relief. Immediate resistance is now at $600, followed by $603 and $606. Support begins at $595, with lower levels at $590 and $588. A break below $594 could send SPY into the $585–$575 range, erasing weeks of gains and threatening the uptrend. Bulls must defend $595 to keep the market structure intact, while bears gain momentum on failed attempts to reclaim $600. Volatility is elevated, and sentiment is increasingly fragile.

Expected Price Action

Our AI model projects SPY’s range for Monday between $593 and $602, signaling room for another volatile session. The market leans bearish as long as SPY remains under $600, with downside targets at $595, $590, and possibly $588. If SPY reclaims $600, resistance comes in at $603 and $606, and a break above $606 would open the door to $610. This is actionable intelligence: traders should favor shorts below $599 and watch for failed rallies near resistance to enter. Long trades should only be considered on confirmed strength above $595 with proper risk controls.

Trading Strategy

With the VIX jumping 15.65% to 20.84, volatility is climbing into risk-off territory, demanding a more conservative approach. Long trades should only be initiated on strength above $595, with profit targets at $600 and $602. Use tight stops near resistance to avoid reversals. Short trades are preferred below $595, targeting $590 and $585, or above $600 with profits taken quickly in case of bounces. Expect wider price swings and be prepared to reduce size until trend direction is confirmed. Tight stops are critical in chop, while looser stops can be employed during sharp directional moves. Flexibility remains key.

Model’s Projected Range

The model projects SPY’s maximum expected range for Friday between $587.25 and $606.25, with growing Put-side dominance across a widening band suggesting the potential for trending price action early next week. Friday's session was shaped by mixed influences. Initial optimism followed better-than-expected UoM Consumer Sentiment and Inflation Expectations data, fueling a recovery from the overnight selloff triggered by escalating Middle East tensions. However, the market soon came to terms with the seriousness of the conflict and reversed course, selling off from just below $602 to close near the session lows at $597.10 decisively below the critical $600 level. This close raises the likelihood that SPY will at least retest the overnight lows at $594.50, with a strong possibility of further downside. While the broader bullish narrative remains intact as long as prices stay above $585, a breach of those overnight lows would test the strength of the prevailing trend. A move down to $585 could invite dip-buying interest, but a decisive break below this level would meaningfully shift the short-term outlook to bearish. Key resistance levels are now seen at $600, $603, and $606, while support lies at $595, $590, and $588. SPY closed below the lower bound of a steep, uncorrected bull channel that has been in place since April. This break signals a need to redraw the channel and raises the likelihood of a broader pullback if weakness persists. Above $605, a strong wall of resistance extends up to $612, likely capping near-term upside. Below $588, support becomes less reliable, with meaningful levels not emerging again until $579. As such, SPY appears on the verge of reverting back into the broader $575–$595 range that has dominated since mid-May assuming no significant escalation in geopolitical risk. Looking ahead to Monday, holding above $594 would support a recovery toward $600 or even $605. Conversely, a break below $594 opens the door to further downside, targeting $590 or $588, both of which are critical for preserving the current bullish structure. Since April, market direction has remained tightly coupled to macroeconomic data, bond yields, inflation prints, tariff developments, and fiscal policy headlines, a trend likely to persist barring any material shifts in policy. Meanwhile, the VIX rose 15.65% to 20.84. While still below the 23 threshold often associated with risk-off sentiment, the move reflects growing investor caution and raises the probability of increased price instability in response to adverse developments. In the current environment, traders are urged to stay nimble and responsive to both economic data and headline-driven risks as the week unfolds.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in an wide Bearish Trending Market State, with SPY closing mid-range. Extended targets printed into the close which implies further weakness on Monday. The MSI spent much of the day in a ranging state, supported by favorable UoM data. But the rally and dip that was bought quickly faded as the market came to terms on the scope of the war in the middle east. As a result, the MSI began rescaling lower and printing extended targets in a bearish state which saw price close near the day’s lows. Overnight when the news of the war hit, the MSI rescaled to a bearish state but quickly rescaled higher while still in a bearish state. This indicated dip buyers were present and would likely support the market in the near term. And hit is what transpired until 1 pm, after which the market began to sell off once again. Currently, MSI support stands at $596.60 with resistance at $598.34.
Key Levels and Market Movements:
On Thursday, we noted: “Risks remain, particularly from external catalysts such as tariff policy developments or escalating tensions between Israel and Iran, either of which could quickly shift sentiment.” We also stated, “Dips continue to be bought. As long as SPY holds above $599 on Friday, upside potential extends toward $610. Conversely, a break below $599 may bring $595 into focus.” Additionally, we said, “Tactical shorts may be considered on failed breakouts above $605 or failed holds below $600.” With that plan in mind and Israel attacking Iran overnight, it was important to adjust expectations for the current environment. That said, the concepts outlined in the post and premarket newsletters remain highly valid, though some levels needed slight tweaking. In the post market newsletter, we highlight only “major” levels of support and resistance. However, there are also several minor levels, and some of those can become critical hence why we always recommend reading both the post and premarket reports. Going into the day with SPY at $600 and the MSI in a wide-ranging state, we held off initially, waiting for the MSI to provide a clearer signal. At 10:20 a.m., price dipped to $596.75, setting up a textbook failed breakdown at that level. Although the MSI was broadly bearish, it lacked extended targets below, so we leaned on our view that “dips continue to be bought” and entered long. Our first target was MSI resistance at $599, which hit quickly. Encouraged, we aimed for the premarket level at $600. That too came fast, so we moved our stop to breakeven and trailed the trade to $602.50, another premarket (minor) level. SPY continued higher and by 1 p.m. had formed a head and shoulders pattern. Despite the MSI remaining in a ranging state, we chose to exit the long and reverse short, sensing that Middle East risk wasn’t fully priced in. SPY then declined, and we set T1 at MSI support near $599. Once hit, we moved our stop to breakeven since the short was still counter-trend. As the MSI began rescaling lower into a bearish state, we set T2 at MSI support at $567 and trailed the remaining 10% of our position. With extended targets printing below and a broadening MSI, we held the trailer in hopes of reaching $595. While SPY didn’t hit that mark, it formed a double bottom at $596, prompting us to close before the session ended. Overall, it was a strong day, with both a profitable long and short trade. This outcome highlights the value of having a structured plan, disciplined execution, and the strategic use of the MSI for control, timing, and identifying actionable levels. Integrated into our broader framework, the MSI continues to prove indispensable for consistent trading performance.
Trading Strategy Based on MSI:
Monday brings no scheduled economic data, but the risk of escalating tensions in the Middle East over the weekend cannot be overstated. The market remains priced for perfection, and any negative headlines could trigger a sharp selloff in SPY, potentially $10 or more, before the open. External catalysts, including tariffs and protests on Saturday, continue to pose significant risk and could quickly shift sentiment. When headlines hit, trade what you see. Absent such catalysts, the bulls still control the narrative, and dips continue to be bought. Our model suggests a likely test of the overnight low at $595. This level must hold for the bull trend to maintain its upward momentum. A break below $595 could lead to a reversion back into the $575–$595 range that has been active since May. As long as SPY holds above $595 on Monday, upside potential extends toward $605. However, should $595 fail, a deeper pullback toward $590 or even $585 becomes possible. These levels mark a critical inflection zone and could shift short-term control back to the bears. Unless a meaningful breakdown occurs, the path of least resistance remains to the upside. Any sustained move above $605 would open the door to new all-time highs. We continue to favor long setups above $595 and shorts above $600. Tactical shorts may be considered on failed breakouts or failed holds below $595 especially if the MSI begins to show signs of weakening. Failed breakouts and failed breakdowns continue to offer high-quality opportunities. Stay alert and responsive as these setups emerge. Avoid trading during Ranging Market States and always align your strategy with the MSI. The MSI provides real-time insight into market control, momentum shifts, and actionable levels. When paired with our Pre-Market and Post-Market Reports, it sharpens execution and enhances trade quality. If you haven’t yet integrated the MSI and model levels into your trading process, now is the time. Contact your representative to get started as these tools are designed to promote consistency and elevate performance.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling SPY $603 to $615 and higher strike Calls while buying $598 to $602 Calls in some size implying the belief that the market will rally on Monday to as high as $605. Dealers are not selling Puts given the risk but do hold some larger Call positions which will generate returns should price resume its bull trend on Monday. To the downside, Dealers are buying $596 to $550 and lower strike Puts in a 3:1 ratio to the Calls they’re selling/buying implying a bit more concern that prices may move lower. Dealer positioning has changed from neutral to slightly bearish for Monday.   
Looking Ahead to Next Friday:
Dealers are selling $598 to $620 and higher strike Calls while selling large quantities of $580 Puts implying the Dealers belief that if the market continues to fall, the floor is $580. These are far out of the money as opposed to close to the money so they are giving themselves room for prices to move lower. The likely ceiling from this positioning for next week is $605. To the downside, Dealers are buying $597 to $505 and lower strike Puts in a 4:1 ratio to the Calls/Puts they’re selling, reflecting a bearish outlook for next week. Dealer positioning has changed from slightly bearish/neutral to bearish. We have not seen this for some time so Dealers are implying more concern that the bull trend may in fact be coming to an end or at least face headwinds next 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 just under $597, the market structure is beginning to tilt bearish as volatility spikes and critical support levels are tested. Traders should focus on short trades above $600, targeting $595 or on a failure of $595 to hold, particularly if its accompanied by bad news out of the Middle East. Long trades should be considered only if $595 holds, preferable on a failed breakdown, targeting $600 and $603. The VIX at 20.84 signals elevated volatility, and traders must size down and tighten stops in choppy conditions. Monday is news-light, but we advise monitoring headlines for geopolitical updates. Review the premarket analysis posted before 9 AM ET for any overnight developments or model updates.

Good luck and good trading!