Market Insights: Tuesday, July 14th, 2026
Market Overview
Stocks pushed higher Tuesday as a cooler-than-expected inflation reading gave markets a reason to exhale. The CPI came in at 3.5% annualized for June, below the 3.8% economists had forecast, easing some pressure on the Fed to tighten further — though traders still have one 25-basis-point hike priced in for sometime in 2026. The Dow finished flat, the S&P 500 gained 0.4%, and the Nasdaq outperformed with a 0.9% advance as semiconductor stocks caught a bid and investors recalibrated their AI trade positioning.
Big bank earnings dominated the headlines, with JPMorgan, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs all reporting a strong second quarter for profits and stock trading. IBM was the ugly exception, cratering roughly 25% after warning that enterprise clients are pulling spending away from software and mainframes and redirecting it toward AI infrastructure. Oil remained in focus as Brent crude held near elevated levels following Monday's historic single-day surge, with the US moving to enforce its Strait of Hormuz blockade Tuesday afternoon. President Trump softened his stance on the 20% cargo fee he announced Monday, saying he'd replace it with investment deals designed to bring capital into the US.
SPY Performance
SPY opened at $750.91 and made a quiet but respectable push higher early in the session, tagging a high of $753.30 before the usual midday indecision kicked in and trimmed some of those gains. The bulls didn't exactly light the world on fire, but they showed enough life to keep the session constructive — holding above the prior day's low of $748.66 and avoiding any real technical damage in the process. After the sharp selloff that snapped the two-day winning streak, even a modest recovery carry some weight.
SPY closed at $751.86, up 0.36%, a modest but meaningful bounce that at least partially answers the challenge laid down by yesterday's ugly tape. Volume came in at 31.77 million shares, well below average, which tells you this wasn't a conviction-driven rally — it was more of a relief exhale than a thunderous show of force from the bulls. The VIX dropped 4.37% to close at 16.41, pulling back some of the anxiety that had spiked so aggressively the day before. That cooling in fear is a mild positive, but with volume this soft, it's hard to read the price action as anything more than the market catching its breath. The bulls answered the bell today, but just barely — they need a higher-quality follow-through session with real participation behind it to shift the narrative from "fragile bounce" to something worth trusting.
Major Indices Performance
The Nasdaq led the way on the day, climbing 0.9% as growth and tech names found their footing after recent pressure. The strength in NVIDIA and much of the broader Magnificent Seven complex gave the Nasdaq the fuel it needed to outperform, and that's exactly the kind of leadership you want to see if this market is going to build any momentum. When the growth names are working, the Nasdaq tends to pull ahead of the pack, and today was a clean example of that dynamic.
The Russell 2000 came in second, gaining 0.4% and showing a flicker of life after its recent struggles. Small-caps have been one of the more frustrating corners of the market, unable to string together consecutive positive sessions with any conviction. One decent day doesn't change the narrative, but it's at least a step in the right direction. This group needs to prove it can hold gains before anyone gets too excited about a small-cap recovery.
The Dow was essentially flat, eking out a gain of just 0.02% as its blue-chip composition kept it anchored while the more dynamic parts of the market did the heavy lifting. The S&P 500 also finished modestly higher on the day. The wide spread between the Nasdaq's solid advance and the Dow's near-standstill is actually the inverse of what we saw in the prior session — instead of risk-off rotation, today hinted at selective risk-on behavior, with investors gravitating toward growth over defensives. That's a constructive sign, but the market will need to see it sustained across multiple sessions before drawing any firm conclusions.
Notable Stock Movements
NVIDIA led the charge for the Magnificent Seven today, surging 4.06% to headline what was a broadly positive session for the group. That's a sharp reversal from the kind of pressure the name absorbed recently, and it set an upbeat tone for a cohort that largely found its footing as market sentiment tilted toward risk-on. When NVIDIA runs like that, it tends to carry confidence across the high-beta, high-multiple space, and today was a textbook example of that dynamic playing out.
The broader Magnificent Seven picture leaned green across the board, with the notable exceptions being Apple and Microsoft, the latter dragging the low end of the group down to -1.55%. It's a bit of an interesting split — Microsoft underperforming on a day when NVIDIA is ripping higher suggests some rotation happening within the group itself, with investors favoring the pure-play AI and growth names over the more enterprise-software-heavy names. Apple lagging on a green tape is worth watching too, as it often signals that consumer-facing tech isn't getting the same love as the infrastructure and AI side of the trade.
The group's mostly green showing fits neatly with the broader improvement in sentiment across today's session. The Nasdaq's 0.9% gain was the strongest of the major indices, confirming that growth and technology names were back in favor. With the VIX dropping 4.37% to 16.41, fear continued to fade, and that kind of cooling volatility environment typically gives the highest-valued names room to run. Microsoft and Apple's red finishes are a minor blemish, but NVIDIA's strong leadership makes it difficult to frame today as anything other than a solid bounce-back session for the Magnificent Seven.
Commodity and Cryptocurrency Updates
Crude oil added another 2.00% today, closing at $79.70 and pushing even deeper into territory that defies longer-term model expectations. The rally well above $70 shows no signs of exhausting itself, with geopolitical tensions and supply dynamics continuing to keep a floor under prices. At these levels, the inflationary implications are real — energy is one of the most direct pass-through costs in the economy, and if crude stays parked in the high $70s, it makes the Fed's balancing act that much harder and dims the prospects for any near-term easing.
Gold rebounded sharply after yesterday's rough session, climbing 1.63% to close at $4,062. That's a strong bounce off the $4,000 area that was flagged as key support, and it reinforces just how eager buyers have been to step in on any dip. The fundamental backdrop hasn't changed — central bank demand, geopolitical uncertainty, and a complicated rate environment are still the story here, and gold continues to prove its resilience.
Bitcoin had its best session in recent memory, surging 3.56% to close above $64,456. After several days of measured, methodical grinding, today's move added some real conviction to the chart. The crypto remains firmly above $60,000 and the intermediate-term outlook stays squarely in the bulls' corner as long as that floor holds.
Treasury Yield Information
The 10-year Treasury yield pulled back modestly on the session, slipping 0.52% to close at 4.590%. It's a small move in the right direction for equity bulls, but one session of softening doesn't change the broader picture — yields remain entrenched above that critical 4.5% threshold where headwinds for stocks are real and persistent. Today's close is a pause, not a reversal, and it deserves to be treated as such.
Within the framework, 4.590% keeps us firmly in uncomfortable territory. The relief is marginal — we're still 19 basis points above the danger line, and the next major waypoint at 4.8% remains only 21 basis points away. That's not a wide buffer. If yields resume their climb in the sessions ahead, the conversation shifts quickly toward a zone where equity selling becomes more sustained and harder to shake off. Above 5%, the risk environment changes in a meaningful way, and the 5.2% level is where the framework projects a correction of 20% or more. None of those levels are immediate threats today, but the proximity to 4.8% keeps the pressure very much alive.
What bulls need to see isn't a single down day in yields — they need a convincing, sustained move back below 4.5% and ideally a grind toward the 4.3% range before any equity rally can develop real legs. One modest dip to 4.590% doesn't deliver that. The key watch going forward is whether today's pullback has any follow-through, or whether it simply represents bond traders taking a breath before pushing yields higher again. If 4.590% becomes a floor rather than a ceiling, the pressure on equities builds right back up. Yields need to prove they're rolling over — not just resting.
Previous Day’s Forecast Analysis
Tuesday's forecast called for SPY to trade within a $746 to $759 range, a thirteen-point window the model flagged as trending rather than consolidating territory. With Monday's close at $749.08 sitting in the lower half of that projected move, the bias heading into the session was bearish. The critical upside gate was $754, identified as the heaviest gamma concentration zone and the level bulls needed to clear with conviction before any real rally could develop. Positive gamma stacked between $753 and $756 was expected to act as a stabilizing tailwind if price could push back into that zone, with $755 and $756 serving as sequential momentum checkpoints and resistance building toward $758 and $759 at the top of the range. On the downside, $752 was the first line in the sand, with a clean break there expected to open the door toward $751 and the critical $750 round-number pivot — the heaviest negative gamma strike on the board. A failure at $750 was projected to expose $748 as the next decision point and $746 as the model's ultimate floor.
The strategy called for reduced position sizing at 70-75% of normal given the VIX jumping 14.17% to close at 17.16, with that volatility expansion warranting tighter discipline and more selective entries. Long setups centered on the $748-749 zone, with a hold and bounce off $748 offering an entry toward initial targets at $752-753 and a secondary push to $754-755 on follow-through. Stops on longs were placed below $746.50. Short setups were attractive near $752-753 on any failed recovery rally, targeting $749-750 initially and $746-747 on further deterioration. Stop-loss parameters were kept tight at 1.25-1.5% from entry given the elevated and expanding volatility environment.
Market Performance vs. Forecast
Tuesday's session validated the forecast's structural framework across multiple dimensions, with price action tracking the model's projected levels with notable precision. SPY opened at $750.91, landing almost exactly on the $750-$751 battleground the forecast had identified as a critical round-number pivot and gamma flip zone — bulls held that level on the open, which was the precise scenario the model outlined as the key test heading into the session. The projected range of $746 to $759 comfortably contained the entire day's move, with the low of $748.66 finding support right at the $748-$749 zone the forecast had explicitly flagged as the key battleground for long entries.
The long setup the forecast outlined proved actionable. A hold and bounce off $748 on the open was the exact scenario described, with the model targeting an initial push back toward $752-$753 — SPY followed that script nearly to the letter, recovering off the $748.66 low and grinding back up through the session to close at $751.86. The $753 zone served as the ceiling once again, with the high of $753.30 stalling right at the first momentum checkpoint the model had identified, confirming that level as legitimate overhead resistance for the second consecutive session. That kind of structural consistency is exactly what the framework is designed to deliver.
The VIX cooperated with the model's base case as well, dropping 4.37% to 16.41 and easing the elevated fear reading that had justified the tighter 70-75% position sizing recommendation. The reduction in volatility gave disciplined traders cleaner entries and more stable intraday conditions than the prior session. The model does not account for unpredictable external developments that can shift sentiment without warning, but when conditions normalized Tuesday, the framework's level architecture guided the session from open to close. The $748-$753 range defined the tape entirely, and that structural precision reinforces the model's value as a tool for identifying where price will pause, pivot, and react.
Premarket Analysis Summary
The premarket analysis posted at market open identified SPY spot at $748.48 sitting in a put-dominated environment, slipping lower from the prior day's consolidation and trading in negative gamma territory. The defining gate above was set at $750 — described as the critical round-number level where conditions would flip back constructive if reclaimed with conviction. Above that, $752 was flagged as where positive gamma firms up, with $753 as the next decision point carrying heavy interest, $755 marking the major call wall, and $757 serving as the expected move top and max upside target. The burden was placed squarely on the bulls, with the analysis noting that sellers retained the edge until $750 was reclaimed and held. On the downside, $747 was identified as the first level to watch sitting just below spot in heavy negative gamma territory, with $746 flagged as where selling could pick up speed. Below there, $745 was outlined as the next decision point with deep negative gamma stacked there, $743 as key support, and $740 marking the bottom of the expected move and the ultimate put wall floor. The analysis explicitly warned that put-dominated conditions below $750 could accelerate quickly if $747 failed to hold early.
The actual session delivered a bullish outcome that rejected the downside framework entirely and drove straight into the upside targets. SPY gapped open at $750.91, immediately clearing the $750 gate that defined the entire setup, and that reclaim proved to be the tell from the jump. The bulls never looked back, pushing to a high of $753.30 — a direct hit on the $752 to $753 resistance cluster outlined premarket as the first meaningful upside zone. The close at $751.86 landed comfortably above the critical $750 pivot, confirming the tone flip the analysis had described as the condition for bulls to take control. The downside levels at $747, $746, and below were never tested, as the gap-up open bypassed the negative gamma pocket entirely. The gain of 0.36% alongside VIX dropping 4.37% to 16.41 reflected a session where the market voted decisively for the bullish scenario, with the $750 reclaim holding exactly as the framework had defined it.
Validation of the Analysis
Today's session delivered a clean upside validation of the premarket framework, with SPY opening directly into a critical decision zone and responding to named levels with impressive precision. The premarket flagged 750 as the defining level — the round-number gate where conditions flip constructive and put-dominated negative gamma gives way to a more bullish tone. SPY opened at $750.91, clearing that level right out of the gate, and that single open above 750 immediately shifted the burden back to the bulls exactly as the analysis described. The gap above that critical threshold on the open was the first signal that the day would develop on the upside of the framework.
From there the map continued to hold up. The analysis identified 752 as the next target where positive gamma firms up, and 753 as the following decision point with heavy interest — and the session high of $753.30 landed almost precisely at that 753 zone, confirming it as the exact friction point the premarket described. Price probed through 752 and pressed into 753 before pulling back, playing out the framework's upside sequence in order and giving traders who were working the levels a clean read on where to manage positioning. SPY closed at $751.86, settling comfortably above the 750 pivot that defined the entire setup, locking in a constructive finish and validating the premarket's core thesis that reclaiming and holding 750 with conviction flips the tone. The VIX dropping 4.37% to 16.41 confirmed the supportive gamma environment the bulls needed to make good on that thesis. The session low of $748.66 briefly dipped below 750 intraday but found footing at the 747 watch level before recovering — a nod to the downside map as well. Start to finish, the levels did exactly what the analysis said they would.
Looking Ahead
Wednesday keeps the inflation theme going with PPI data hitting the tape — both the headline and core producer price index readings for the month. After Tuesday's CPI print sets the tone, the PPI numbers will either confirm the inflation narrative or complicate it. Producer prices matter because they represent what businesses are paying upstream, and when those costs stay elevated, they eventually find their way into consumer prices down the road. A soft PPI reading after a cool CPI would be a powerful one-two punch for the bulls, reinforcing the case that inflation is genuinely losing momentum. A hot PPI after a cool CPI muddies the water and keeps the Fed's path uncertain.
Fed Chairman Warsh is back at the microphone on Wednesday as well, giving him a second straight day to shape market expectations. By Wednesday, traders will already be sitting with Tuesday's CPI reaction fresh in their minds, so every word out of Warsh carries extra weight. If CPI came in friendly and Warsh doubles down on a patient tone, the market could build on any overnight gains in a meaningful way. If the prior session was volatile and sentiment is fragile, his testimony becomes a potential flashpoint all over again. Have your levels ready and let the data lead.
Market Sentiment and Key Levels
The directional bias today leans cautiously bullish, though the bulls haven't exactly made a commanding statement. SPY gained 0.36% and closed at $751.86, grinding higher in a session that felt more like a slow drift upward than a convincing breakout. The VIX dropping 4.37% to 16.41 is an encouraging sign — fear is coming out of the market, and that kind of volatility compression tends to create a more supportive environment for equities to push higher. The concern is that volume came in at 31.77M, below average, which means the bulls are advancing without much institutional firepower behind them. That's the kind of rally that can stall or reverse quickly if sellers decide to show up with conviction.
Key resistance sits at $753.30, today's session high, and a clean break above that level on stronger volume would signal that buyers are gaining real confidence and could open the door to a run toward the $755 to $757 range. On the downside, $748.66 — today's intraday low — is the support line to watch. A break below that with follow-through selling would put the recent grind higher in serious doubt and expose SPY to a pullback toward the $745 area. The Nasdaq's 0.9% gain is a positive signal, as tech leadership tends to pull the broader market along when it's healthy. Gold surging 1.63% to $4,062 and Bitcoin closing above $64,456 with a 3.56% pop suggest risk appetite is broadening out, which is generally a tailwind for equities. The 10-year yield sitting at 4.590% remains an ever-present overhang that the market hasn't fully shaken. The bulls have a modest edge here, but they need volume to show up before this move earns any real trust.
Expected Price Action
Wednesday's session presents actionable intelligence generated by our AI model, with SPY projected to trade within a range defined by $740 on the downside and $757 as the max upside target. That seventeen-point window signals the market will trend rather than consolidate, and with Tuesday's close at $751.86 sitting in the middle portion of the expected move, the bias leans modestly bullish but remains contingent on clearing and holding the critical $750 level with conviction.
The defining level heading into Wednesday is $750 — that round-number gate is the gamma flip point where conditions turn constructive above it and deteriorate below it. With Tuesday's close sitting comfortably above it, the bulls have the initial edge, but holding it is the first order of business at the open. Above $750, $752 is where positive gamma begins to firm up, followed by $753 as the next decision point with heavy interest stacked there. The major call wall sits at $755 with $757 capping the expected move top as max upside — that's the ceiling bulls need to push through to sustain any meaningful momentum. On the downside, $747 is the first level to watch and the nearest danger zone — losing it cleanly opens a negative gamma pocket that can accelerate selling in a hurry. Below $747, $746 is where selling pressure could intensify, with $745 as the next meaningful decision point and deep negative gamma stacked below it. A break of $745 puts $743 in play before reaching $740 as the model's ultimate floor and line in the sand. VIX dropping 4.37% to 16.41 is a constructive backdrop, but the put-dominated environment means any slip below $750 early Wednesday should be treated with respect — the negative gamma below that level can flip the tone fast.
Trading Strategy
The VIX dropping 4.37% to 16.41 is an encouraging sign for the bulls, signaling that options markets are unwinding some of the fear premium that had built up and that hedging demand is cooling off. At 16.41, the VIX has pulled back into a more relaxed zone, which historically supports a grind-higher environment where dip buyers feel comfortable stepping in. That said, 16.41 isn't complacency territory just yet — it's a level that suggests measured optimism rather than outright euphoria. The modest gain on below-average volume keeps us from getting overly aggressive on the long side, because quiet rallies without institutional participation can reverse quickly if sentiment shifts. Position sizing can move back up toward 80-85% of normal given the improvement in the volatility read, but the lack of volume conviction means this isn't the time to load up to full exposure.
Long setups are in play with the market in a constructive posture. The $750-751 zone now acts as near-term support, and any early morning pullback into that area on stable breadth gives a solid long entry with a first profit target at $753 and a secondary target at $755-756 if buyers show up with genuine conviction. In a rising market scenario, a clean breakout above $753.30 on improving volume sets up a momentum long with targets at $755 and then $758 on the next leg, stops placed below $750 to protect against a failed breakout. The session high provides the near-term ceiling to watch — a close above it on volume expansion would confirm the uptrend is healthy and open the door to further upside.
Short setups are less compelling given the improved tone, but they remain available for disciplined traders. Any failed rally attempt into the $753-754 resistance band on thin volume or weakening breadth sets up a fade trade, with initial downside targets at $750-751 and a deeper move toward $748 if sellers take control. In a falling market scenario, a break back below $750 on elevated selling pressure reopens short entries with targets at $748 and $746, stops placed above $752.50. With the VIX at 16.41 and retreating, keep stop-loss parameters in the 1-1.25% range from entry — a calmer volatility environment still carries reversal risk, and the disciplined trader respects the levels rather than overstaying a position.
Model’s Projected Range
SPY's projected maximum range for Wednesday is $746 to $757, with the Call side dominating in an expanding band that suggests trending price action with intermittent chop. Wednesday brings Core PPI m/m and PPI m/m data along with Fed Chairman Warsh testifying, and while PPI readings can move markets, this combination is likely to produce significant volatility particularly in the first hour of trading. SPY closed at $751.86, up 0.36% on the session, trading in a range from a low of $748.66 to a high of $753.30 off an open of $750.91, with volume coming in lower than average — a constructive but measured session overall. SPY is trading near our model's first support at $750, with trade deal optimism and easing geopolitical tensions continuing to provide a tailwind for equities. On the upside, a clean break above $755 opens the door toward $757, while a failure at $750 puts $749 in play next — and if that level gives way, there is little to keep price from falling toward $746. 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 $755, $757, $759, $760, while support rests at $750, $749, $746, $745. With SPY closing just below the upper half of the projected range, we favor buying dips at $750 on any early weakness Wednesday. Bitcoin surged 3.56% to close above $64,456, and MAG stocks posted a mostly green day led by NVIDIA, which ripped 4.06% higher — though Microsoft was the notable laggard, slipping 1.55%, making this a broadly supportive picture for the rally with just one soft spot in an otherwise strong leadership group. The VIX closed at 16.41, down 4.37%, suggesting fear continues to bleed out of the market as bulls maintain control of the tape. SPY closed just above the lower line of its uptrend channel, with structural support near $750 keeping the broader trend intact heading into Wednesday's session.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended in a Bullish Trending Market State with SPY closing at $751.86. Since SPY closed inside the MSI range, support remains support and resistance remains resistance heading into Wednesday. MSI support sits at $751.7 with resistance at $752.71, a narrow $1.01 spread that tells you right away this market is consolidating rather than trending with conviction. Extended targets were not printing at the close, which confirms the muted, low-energy tone that defined most of the session. Extended targets did print during premarket and the AM session, visible above the upper MSI line, though that enthusiasm faded quickly and never translated into a sustained directional move.
The MSI did not rescale overnight until just before the open, when favorable inflation data sparked a brief pop. That pop was short-lived, and the MSI opened the day in a Ranging state, spending much of the morning flipping between a ranging state and a bearish state much like the prior session. Fed Chair Warsh's comments eventually gave the bulls a catalyst, pushing SPY higher and triggering a rescale into a narrow Bullish Trending state. From there, a rescale higher followed by several lower rescales kept the market contained in a tight range with little additional upside after that initial Warsh-driven move. The MSI then rescaled back into a ranging state, which could have been anticipated by those watching the lower rescalings within the bullish structure. Finally, after midday, price rallied off $750 and the MSI returned to its narrow Bullish Trending state where it held for the remainder of the session. With no extended targets printing at the close and the range sitting at just $1.01, the MSI is forecasting a likely sideways to possibly higher session on Wednesday, though the bulls are likely to maintain pressure to the upside. Any failure of MSI support is likely to see SPY retest the day's lows. MSI support is $751.7 with resistance at $752.71.
Key Levels and Market Movements:
Monday we stated, "Bulls need to reclaim that $749.22 level overnight or at the open with conviction," and added, "A sustained move above $750.52 with the MSI rescaling into a Bullish Trending state and extended targets printing above would be a meaningful shift in tone," while also noting, "If the inflation numbers come in cooler than expected, a short squeeze toward $750.52 and above is very much on the table, especially with the MSI already set up in a narrow range that historically precedes larger moves."
That read proved accurate in the broad strokes if a little messy in execution. SPY opened at $750.91, and the favorable inflation data that came in before the open did initially push price higher, briefly printing extended targets above in premarket and the AM session that suggested bulls had momentum. But the move had no staying power. The MSI opened in a ranging state and spent the bulk of the morning grinding sideways, flipping between a ranging state and a bearish state without giving traders a clean directional edge. For much of the morning it felt like a replay of Monday, with buyers and sellers battling for control in an indecisive chop that rewarded patience over aggression.
The session's defining moment came when Fed Chair Warsh's comments hit and SPY lifted sharply, driving the MSI to rescale into a narrow Bullish Trending state. That rescale gave bulls the framework they needed, and traders who bought dips to MSI support during that transition had clean entries targeting MSI resistance at the upper boundary of the range. The MSI rescaled higher and then several times lower, keeping the ceiling tight and capping the upside after the initial Warsh pop. When the MSI slipped back into a ranging state, attentive traders could see the lower rescalings had telegraphed that softening in real time. Price dipped back toward $750 midday and then staged a recovery, with the MSI returning to its narrow Bullish Trending state and holding that structure through the close. SPY printed a session high of $753.30 and a low of $748.66, closing at $751.86, a gain of 0.36% on below-average volume of 31.77 million shares. The VIX dropped 4.37% to 16.41, reflecting a meaningful reduction in fear that was consistent with the bullish close. Buying dips to MSI support as price rallied off $750 in the afternoon offered clean setups targeting MSI resistance, and traders who stayed patient through the choppy morning were rewarded with cleaner entries later in the day. At minimum it was a four-for-four session for traders following the framework. It was an easy day to read albeit not an easy day to trade given the tight choppy range. But substantial setups were present, 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:
Wednesday has heavy economic data with Core PPI m/m and PPI m/m, along with another round of Fed Chair Warsh Testifies, which can introduce significant volatility, so traders should be ready to trade what they see rather than predict. PPI data hitting before the open has a history of setting an immediate directional tone, and Warsh's testimony proved its market-moving power just today. Another appearance from Warsh means Wednesday carries a second potential catalyst that can shift the MSI state quickly in either direction. The best approach remains the same: let the MSI react to the data and trade what it tells you.
Heading into Wednesday the MSI closed in a narrow Bullish Trending state with a $1.01 spread. That narrow width is the key detail. It tells you the bulls have nominal control but not dominant control, and that this market is coiling rather than trending with conviction. A narrow Bullish Trending state suggests the most probable path is sideways to possibly higher, but a break in either direction is entirely possible given how compressed the range is. The absence of extended targets at the close reinforces the softer bullish read. The herd was not participating in Tuesday's move, and without extended targets printing, Wednesday may very well look a lot like Tuesday did, with price grinding, flipping between states, and requiring patience before clean setups emerge.
Bulls want to see price hold above MSI support at $751.7 overnight and use it as a launching pad to press SPY toward and through MSI resistance at $752.71. If bulls can push through $752.71 with conviction and the MSI rescales higher into a wider Bullish Trending state with extended targets printing above, that would signal a meaningful acceleration and give bulls the momentum to press toward the session high of $753.30 and potentially beyond. Bears want to see $751.7 MSI support fail. A clean break below $751.7 with the MSI rescaling into a ranging or bearish state would shift control back to the sellers and put the day's low of $748.66 back in play. Any extended targets printing below in that scenario would confirm the sellers have stepped on the gas and deeper levels come into view.
With PPI data hitting before the open, premarket will again set the tone. If PPI comes in hotter than expected, anticipate the MSI to rescale lower and the bullish structure to erode quickly, with bears pressing toward $750 and below. If PPI is cooler than expected, bulls get another catalyst and the narrow MSI could snap higher with the MSI rescaling upward and extended targets printing above, creating a clean long setup buying dips to $751.7 MSI support and targeting $752.71 and beyond. Within the session, the strategy is simple: buy dips to $751.7 and target $752.71, and sell rallies to $752.71 if the MSI fails to hold or rescale higher. If the MSI drops into a ranging or bearish state, avoid forcing longs and wait for either a failed breakdown at support or a confirmed rescale before committing. Remain on the right side of whatever the MSI signals in real time.
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 $754 to $776 and higher strike Calls while buying $752 to $753 Calls, indicating the Dealers' desire to participate in any rally on Wednesday, though their Call buying is notably small in size, suggesting they believe prices may push a bit higher but will likely stall out before getting there. The ceiling for Wednesday appears to be $757, where a major wall of resistance is likely to contain price. To the downside, Dealers are buying $751 to $688 and lower strike Puts in a 3:1 ratio to the Calls they're selling, displaying moderate concern that prices could move lower. With no ITM Put selling in sight, Dealers are not signaling strong conviction that the market moves meaningfully higher from here. The projected range for Wednesday is quite narrow, and with material support sitting at $745, expect choppy, trap-filled price action for most of the session absent an external catalyst. Below $759 is bearish and above $752 is bullish, but the $757 resistance wall is the level to watch. Dealer positioning is unchanged at neutral/slightly bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $756 to $778 and higher strike Calls while buying $752 to $755 Calls, indicating the Dealers' desire to participate in any continuation of this week's rally, though their Call buying remains small in size, reflecting cautious optimism at best. The ceiling for the week appears to be $760. To the downside, Dealers are buying $751 to $645 and lower strike Puts in a 5:1 ratio to the Calls they're selling, displaying significant concern that prices could move decidedly lower, as Dealers remain heavily hedged in the event conditions deteriorate. Large walls at $755 and $757 will act as key resistance levels, while major support sits at $748 and $745. We recommend traders remain bullish above $751 but below $750 we are bearish. 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
SPY closed at $751.86 with VIX cooling 4.37% to 16.41, keeping the bias tilted toward longs. Watch $748.66 as key support — a break below opens the door to $745. Favor longs on dips with stops below $748, and target resistance near $753.30.
Keep positions sized appropriately given below-average volume, and don't chase extended moves. 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!
