Market Insights: Wednesday, June 18th, 2025
Market Overview
Markets were largely flat on Wednesday, pausing after two days of losses as traders digested the Federal Reserve’s latest policy stance and kept one eye on rising tensions in the Middle East. The Fed left interest rates unchanged for the fourth straight meeting and released its updated Summary of Economic Projections, which showed policymakers expect two rate cuts by the end of 2025, bringing the median forecast for the federal funds rate to 3.9%. However, there was significant division among officials, with some seeing no need for cuts at all. Chair Jerome Powell reinforced a cautious tone, noting the Fed is waiting to better understand the inflationary impact of tariffs before making a move. Meanwhile, geopolitics continued to weigh heavily on sentiment. President Trump, when asked about a potential military strike against Iran, gave a cryptic “I may do it. I may not do it,” adding uncertainty to an already fragile environment. Iran has reportedly prepared missile systems targeting U.S. bases should direct conflict erupt. Despite all this, the major averages barely moved by the close, reflecting a tense but indecisive market. Oil prices held steady near $75 as traders grappled with the potential for further escalation in the region.
SPY Performance
SPY closed essentially flat on the day, slipping just 0.01% to end at $597.48 after opening at $598.36. It traded in a tight range between a high of $601.22 and a low of $596.48, closing the day with moderate volume of 66.39 million shares, slightly below Tuesday’s elevated levels. Price action was indecisive, with SPY briefly pushing above $600 before fading late in the session. The inability to hold above that psychological threshold suggests ongoing uncertainty, especially as markets wait to digest the Fed’s tone and remain cautious about possible geopolitical fallout.
Major Indices Performance
The Russell 2000 outperformed the broader market on Wednesday, gaining 0.54% as small caps rebounded modestly from recent weakness. The Nasdaq followed with a 0.13% uptick, fueled by a selective rally in tech, while the Dow lost 0.10%, giving back early gains as caution returned late in the session. The S&P 500 finished just below flat, slipping 0.01%. Midday optimism faded after Fed Chair Powell’s comments, which dampened expectations for a dovish pivot despite a forecast for two rate cuts this year. Sector rotation was limited, with no clear leadership. Overall, markets remained highly sensitive to developments on the geopolitical and macroeconomic fronts, producing a choppy, uncertain trading environment.
Notable Stock Movements
The Magnificent Seven had a mixed day, with four members closing green while Alphabet, Amazon, and Meta slipped slightly. There were no outsized movers within the group, reflecting the broader market’s indecision. The tech giants largely moved sideways after recent selling pressure, suggesting consolidation amid macro uncertainty. While the group avoided the sharp losses seen earlier in the week, their lack of direction continues to reflect the market’s cautious tone. With risk appetite subdued and geopolitical risk elevated, leadership from these mega caps may remain limited until clearer catalysts emerge.
Commodity and Cryptocurrency Updates
Crude oil settled at $73.24, down just 0.04%, as prices held steady near elevated levels on ongoing fears that the U.S. could be drawn into the Middle East conflict. While our model had forecasted a decline toward $60, that outlook remains invalid as long as geopolitical tensions persist, and a spike to $100 remains possible if the situation escalates. Gold dropped 0.64% to close at $3,385, as some safe-haven demand eased following the Fed’s steady policy message. Bitcoin pulled back 0.48% to finish just above $103,800, continuing to consolidate after recent highs. Our stance remains unchanged; we are buyers of Bitcoin only between $83,000 and $77,000, and caution strongly against purchases below $77,000 due to elevated downside risk.
Treasury Yield Information
The 10-year Treasury yield dipped slightly by 0.09% to 4.386%, easing back from Tuesday’s high of 4.50%. While the move was minor, the retreat reflects a tempered inflation outlook following Powell’s measured comments. However, yields remain near the upper end of their recent range, and any renewed push toward 4.8% would likely exert fresh pressure on equities. For now, the lower yield offered some breathing room to risk assets, but rising oil prices and lingering inflation concerns mean that downside in yields may be limited unless a clear deflationary signal emerges.
Previous Day’s Forecast Analysis
Tuesday’s outlook forecasted SPY to range between $590 and $603, with a bearish lean under current conditions. Downside levels were identified at $595, $592, and $590, while upside targets included $600, $603, and a stretch to $605. The model emphasized that any move below $590 would risk a test of $585, while strength above $600 could shift control back to the bulls. Long trades were recommended if $595 held, and short trades favored on failed rallies near $600. The strategy advised maintaining flexibility due to headline risk, especially from the Fed and the Middle East conflict, and highlighted the importance of acting decisively near major levels.
Market Performance vs. Forecast
Wednesday’s SPY session played out in line with the prior day’s analysis, trading within the forecasted range and respecting key technical levels. The ETF opened at $598.36, briefly pushed to $601.22, and pulled back to close at $597.48. The bias level of $600 again proved formidable, capping any upside attempts, while support near $595 held firm intraday. This confirmed the model’s guidance that rallies would likely fade and support near $595 was critical. Although no major breakout occurred, the narrow range and reversal patterns near resistance validated both long trades from support and short trades at failed resistance attempts. Traders sticking to the game plan had the opportunity to profit from both sides of the tape in a controlled but choppy environment.
Premarket Analysis Summary
In Wednesday’s premarket analysis posted at 7:35 AM, SPY was trading near $597.85 with a key bias level identified at $598. The analysis highlighted that holding above this level could support long trades targeting $600 and $603.25, while failure to reclaim $598 would likely result in choppy, sideways action. Downside levels to watch included $597, $595, and $590, though a move toward the lower end of the range was viewed as less likely without a negative news shock. Traders were advised to look for opportunities around support and avoid the middle of the range, especially ahead of the FOMC announcement, which was expected to introduce additional volatility.
Validation of the Analysis
Wednesday’s market confirmed the accuracy of the premarket forecast. SPY failed to hold above the $598 bias level for long, fading after testing $601.22 and ultimately closing below that threshold. The predicted chop and consolidation played out, particularly as the market hovered around $598 before slipping lower. Support at $595 was never truly tested, while upside to $603.25 never materialized, confirming the cautious tone of the premarket commentary. Traders who avoided the middle of the range and waited for clear setups near $600 or just above $595 were best positioned. Once again, the premarket levels proved reliable in identifying where opportunities were likely to emerge.
Looking Ahead
With markets closed Thursday for Juneteenth, attention shifts to Friday’s session, which features no major economic data releases. This sets up a potentially low-volume trading day driven more by positioning and macro headlines than economic catalysts. Investors should remain focused on geopolitical developments and ongoing Fed commentary, which continue to drive sentiment. Expect Friday to open quietly, but be prepared for sharp intraday swings if news breaks. Traders should monitor levels closely as the week wraps up and quarter-end flows start to influence market direction.
Market Sentiment and Key Levels
SPY closed Wednesday at $597.48, just under the key $598 bias level, with sentiment still tilted slightly bearish in the short term. Key resistance remains at $600 and $605, while support sits at $595, $590, and $586. While SPY has not broken down decisively, the inability to hold above $600 continues to limit bullish momentum. A move back above $600 could fuel a rally toward $605, while a breakdown below $595 opens the door for a test of $590. With geopolitical risk and Fed policy still front and center, headline-driven swings remain a real possibility. For now, the market continues to tread water beneath key resistance.
Expected Price Action
Our AI model projects SPY’s trading range for Friday between $593 and $603, in a narrowing range suggesting consolidation with periods of trending price action. The outlook remains cautiously bullish as long as SPY holds above $590, with near-term upside targets at $600 and $605. If resistance at $600 breaks, a move toward the upper end of the range is likely. However, a loss of $595 would be a warning sign and perhaps trigger the bears to test $590, with $586 and $585 as deeper targets. This is actionable intelligence: traders should favor long setups above $590 with confirmation and short setups only on failed moves above $600 or clean breaks below $590. Macro risks remain elevated, so traders must stay flexible and alert for abrupt sentiment shifts.
Trading Strategy
SPY’s close near $597.50 places it in a precarious zone just under key resistance. Long trades can be considered if SPY holds above $590 with initial targets at $600 and $605. Short trades are favored on failed breakouts above $600 or if SPY decisively loses $595, targeting $590 and $586, with a possible stretch to $585. The VIX fell 6.85% to 20.14, signaling a slight easing in volatility, but it remains at a level where sharp reversals can occur. With no major data due Friday, look for setups around the key levels identified and avoid overcommitting unless a clear directional move develops. Continue to prioritize setups with strong technical confirmation and manage risk tightly around volatile zones.
Model’s Projected Range
The model projects SPY’s maximum expected range for Friday of $589.50 to $607, with the Call side dominating in a stable band suggesting trending price action as a result of the war in the Middle East. Today’s session reflected growing concerns that the U.S. could become directly involved in the conflict, potentially putting American troops at risk. Simultaneously, the market is contending with a Federal Reserve still convinced that inflation remains elevated enough to justify keeping interest rates higher in the near term. The market initially rallied on hopes the Fed might pivot on rates, but following Chair Powell’s remarks, those gains reversed and the market closed flat on the day. While the past two sessions have seen modest pullbacks, the moves have not been especially significant. We continue to believe that any direct U.S. involvement in the conflict would likely trigger substantial market pressure, making geopolitical risks from the Middle East a key factor that should not be underestimated. As such, we maintain a cautious outlook until further clarity emerges, even as the broader bullish narrative remains intact. Technically, as long as prices remain above $585, the bulls retain control. Holding above $595 could fuel a push toward higher levels, but a failure at $590 would serve as a clear warning that the market may test lower levels. In the absence of a major external catalyst, our model suggests dips are likely to be bought. Key resistance is now seen at $600 and $605, with support at $590, $586, and $585. SPY closed at the lower boundary of a steep bull channel that has been intact since April. The model redrew this channel today and continues to anticipate higher prices. However, resistance above $605 is intensifying, likely capping near-term upside, while limited support below $597 could open the door to deeper downside. SPY appears poised to remain in the $575–$595 range that has defined much of the trading since mid-May, assuming geopolitical tensions remain contained. For Friday, holding above $595 would support a recovery toward $600 or $605. A break below $595, however, would increase the likelihood of a test of $590, a critical level for preserving the current bullish structure. Since April, market direction has closely tracked macroeconomic data, bond yields, inflation metrics, tariff developments, and fiscal policy signals. This dynamic is expected to persist barring a significant policy shift. Meanwhile, the VIX fell 6.85% to 20.14. While still below the 23 level typically associated with risk-off sentiment, this reading reflects heightened investor caution and the potential for increased volatility. In this environment, traders are advised to remain agile and responsive to economic data releases and evolving geopolitical developments as the week unfolds.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI is currently in wide Ranging Market State, with SPY closing just above MSI support. Extended targets printing briefly in the morning session but quickly faded as the market approached FOCM. The wide range and unchanged nature of the day implies more of the same on Friday. The MSI opened the day in a wide ranging state which rescaled to a strong bullish state with extended targets above. This saw price move to the highs of the day above $601, but again, this faded and the MSI flipped between its current wide ranging state and a bullish state until FOMC. After FOMC the MSI rescaled lower to a bearish state but there were no extended targets below and the range was narrow. As such, SPY reverted back to its current, “transition” state ahead of the holiday. Currently, MSI support stands at $597.79 with resistance at $599.41.
Key Levels and Market Movements:
On Tuesday, we noted: “FOMC days are often filled with traps, multiple failed breakdowns, and failed breakouts.” We also stated, “The market remains priced for perfection, making it vulnerable to sharp selloffs on negative headlines,” and, “We continue to favor long setups above $590 and shorts above $600.” With this in mind, at the open as the MSI signaled a weak bearish state and price tested overnight support at $597.50, we entered long on a double bottom/failed breakdown setup, targeting $600 for 70% of our position. As the MSI rescaled to a ranging state, we adjusted our target to MSI resistance at $599.40 in case of a reversal. This target hit before 10 a.m., and we then set T2 at $600.25 as the MSI shifted higher, giving us confidence that price would reach the next resistance level. This second target also hit before 10 a.m. With our stop moved to breakeven, we waited to see what SPY had in store. Our next level, identified in the premarket report, was $603, a stretch, but plausible given the setup and absence of trade risk. With extended targets printing above, we held to see if price might accelerate higher. Price reached $601.20 but then began to stall. When extended targets stopped printing, we decided to lock in the remaining 10% of the position at $600.25, our second target level. Price pulled back, and with less than two hours to go before the FOMC release, we held off until 2 p.m. to avoid getting caught in FOMC’s notorious traps. When the report dropped, price spiked to $601 but without extended targets above and mindful that the first move after FOMC is often a trap, we faded the spike short, setting an initial target at $599.40. This is an advanced setup, not typically covered in these newsletters, but since we took it, we’re sharing it here. Our first target was hit quickly. We then set our sights on $597 for T2. Price reversed sharply from $598.50 back toward our entry. Our stop was just above the day’s highs to accommodate FOMC-related volatility. After another test of $601 and another rejection, we reloaded the short for a second attempt at $599.40. Once again, that target hit quickly. T2 was again set at $597, which price ultimately reached as the MSI rescaled lower. Without extended targets below and with a narrowing MSI, we closed the trade fully at $597 and called it a day. A solid session with three winning trades, all guided by a structured plan, disciplined execution, and the strategic application of MSI for control, timing, and actionable levels. Integrated with our broader framework and model levels, MSI remains an indispensable tool for consistent trading performance.
Trading Strategy Based on MSI:
Markets are closed Thursday, and with no scheduled economic news on Friday, it’s likely we’ll see a low-volume, slow, and choppy session, typical of a post-holiday summer Friday. Of course, this outlook assumes no further escalation in the Middle East conflict. Should the U.S. deepen its involvement, expect a knee-jerk selloff in equities alongside a spike in crude, particularly if crude breaks above $100 per barrel. At that level, inflation concerns are likely to resurface and put renewed pressure on the market, even if temporarily. Absent these macro risks, the broader bull trend remains intact as long as SPY holds above $585. However, a test and failure of $595 would serve as an early warning sign that downside pressure may be building. As always, it’s essential to trade the market in front of you as models cannot predict the effects of geopolitical events until they occur. The market remains priced for perfection, making it highly vulnerable to sharp selloffs on negative headlines. We strongly recommend maintaining downside protection through protective puts or VIX calls. External catalysts such as tariffs continue to pose real risk and could quickly shift market sentiment. A return to the $575–$595 range, which has defined much of trading since May, remains a realistic scenario. On the upside, as long as SPY holds above $590 on Friday, a move toward $605 is still on the table. Conversely, a break below $590 could trigger a deeper pullback toward $585, an important inflection zone that may shift short-term control back to the bears. Unless a meaningful breakdown occurs, however, the path of least resistance remains to the upside. A sustained move above $605 would likely open the door to new all-time highs. We continue to favor long setups above $590 and shorts above $600. Tactical shorts may also be considered on failed breakouts or failed holds below $590, especially if MSI signals weakening conditions. Failed breakouts and breakdowns continue to offer high-quality opportunities. Stay alert and flexible as these setups evolve. Avoid trading during Ranging Market States and always align your strategy with MSI. MSI delivers real-time insight into market control, momentum shifts, and actionable levels. When paired with our Pre-Market and Post-Market Reports, it enhances execution and raises trade quality. If you haven’t yet integrated MSI and model levels into your 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 $598 to $610 and higher strike Calls while buying $599 to $603 Calls indicating the Dealers desire to participate in any rally on Friday. The positioning is unusual in that the Dealers are selling close to the money Calls but also buying further out of the money calls, similar to a Butterfly. Butterflies are useful when price doesn’t move much while Theta decay turns into profits. As such Dealers are implying little price movement as we head into the weekend. To the downside, Dealers are buying $597 to $550 and lower strike Puts in a 2:1 ratio to the Calls they’re selling/buying implying little concern that prices may move lower by Friday. Dealer positioning is unchanged from neutral to neutral.
Looking Ahead to Next Friday:
Dealers are selling $607 to $625 and higher strike Calls while buying $598 to $606 Calls implying the Dealers belief that the market is likely to rally next week and if it does, they want to participate. The likely ceiling for next week is currently $608. To the downside, Dealers are buying $597 to $505 and lower strike Puts in a 3:1 ratio to the Calls they’re selling/buying, reflecting a slightly bearish/neutral outlook for next week. Dealer positioning has changed from bearish to slightly bearish/neutral. 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
SPY’s continued struggle to hold $600 and its close under $598 signals indecision, not conviction. Traders may consider long setups on dips toward $590 with tight stops, aiming for $600 and possibly $605 if momentum builds. Conversely, short trades remain attractive on failed breakouts above $600 or if SPY loses $590 cleanly, with targets down to $585. The VIX at 20.14 reflects ongoing risk sensitivity but not panic, implying room for fast moves. Position sizing should remain conservative. Traders should review the premarket analysis posted before 9 AM ET to account for any changes in the model’s outlook and in Dealer Positioning.
Good luck and good trading!
