Market Insights: Tuesday, July 22nd, 2025
Market Overview
The S&P 500 eked out another record on Tuesday, continuing its run of new highs despite a mixed tape across the broader market. The benchmark index finished just above the flat line at 6,309.62, securing a second straight all-time close. Earnings took center stage as investors digested mixed results from major corporations, while trade developments remained a persistent backdrop.
Early losses were reversed after President Trump announced a new trade agreement with the Philippines, injecting optimism into an otherwise uncertain landscape. Still, concerns linger. General Motors issued a stark tariff warning, reporting a 32% drop in core profits for Q2 and forecasting deeper impacts in the current quarter. Their stock, along with Philip Morris, RTX, and Lockheed Martin, weighed on sentiment following underwhelming earnings.
Meanwhile, anticipation continues to build for key tech earnings. Alphabet and Tesla will report after the bell on Wednesday, with investors closely watching to see whether sky-high expectations for AI revenue growth are justified. While the S&P and Nasdaq hit fresh highs Monday, today’s action showed the market is beginning to question how much further the rally can go without fresh catalysts.
Trade tensions continue to simmer. While some progress was made with the Philippines, talks with India are reportedly deadlocked, and negotiations with the European Union remain stalled. However, Treasury Secretary Scott Bessent is expected to meet with his Chinese counterpart in Stockholm next week, with hopes of extending the August 12 tariff deadline. With that in mind, the market’s ability to stay afloat amid these crosscurrents remains impressive.
SPY Performance
SPY posted a fractional gain on Tuesday, rising 0.01% to close at $628.86. After opening at $629.08 and dipping to a session low of $626.19, buyers stepped in at key support to push it back near the highs. Volume was slightly below average at 57.09 million shares, reflecting a market that is stalling just beneath major resistance but still respecting critical support zones. The close marked a new all-time high, reinforcing the uptrend despite intraday volatility.
Major Indices Performance
The Russell 2000 led the market Tuesday with a solid 0.81% gain, signaling strength in small caps as risk appetite held steady. The Dow followed, rising 0.40% and benefiting from rotation into more value-oriented names. The S&P 500 inched higher to notch a new record close, finishing just above breakeven. Meanwhile, the Nasdaq lagged, falling 0.39% as investors positioned cautiously ahead of big tech earnings from Alphabet and Tesla. Broader market action was choppy, with pockets of strength balanced by caution in rate-sensitive and growth-heavy sectors. With no major economic releases, trade headlines and earnings dictated sentiment.
Notable Stock Movements
The Magnificent Seven saw a mixed session with Netflix leading the downside, sliding more than 3.5%, followed by Nvidia, which dropped 2.55%. Alphabet, Apple, and Tesla bucked the trend and closed higher, helping cushion the tech-heavy Nasdaq’s decline. Alphabet's resilience reflects optimism around its upcoming earnings and AI-driven growth narrative. Meanwhile, Nvidia’s pullback suggests some profit-taking after a strong run, mirroring the broader hesitancy in mega-cap tech. As a group, performance was uneven, reflecting traders’ selective risk-taking ahead of earnings.
Commodity and Cryptocurrency Updates
Crude oil fell 0.73% to $65.47 as macro concerns and weak demand forecasts continued to pressure prices. Our model still expects a retreat toward the $60 level later this year. Gold extended its gains, climbing 1.06% to $3,442.60 as traders sought safety amid ongoing geopolitical and trade uncertainty. Bitcoin surged 2.49% to close above $119,800, resuming its climb after consolidating in recent sessions and signaling renewed appetite for speculative assets.
Treasury Yield Information
The 10-year Treasury yield slipped 0.78% to close at 4.345%, staying beneath the closely watched 4.5% level. The move lower offered some relief to equities, which continue to trade with sensitivity to rates. Yields remain elevated, and any climb toward 4.8% or higher would likely trigger broader risk-off behavior. However, the current retreat in yields offers a supportive backdrop for risk assets, especially as inflation data remains benign.
Previous Day’s Forecast Analysis
Monday’s forecast projected a tight SPY trading range between $627 and $632.50 with a bullish tilt, emphasizing support at $625 and targets near $630–$632. The strategy favored long trades near $625 or $626.50 and suggested caution near upper resistance. The model called for potential moves to $635–$638 on strength but warned of exhaustion in that zone. Resistance at $632 was expected to act as a ceiling unless earnings drove a breakout. The VIX reading of 16.64 was cited as a sign of continued low volatility but potential for sharp swings.
Market Performance vs. Forecast
SPY’s Tuesday action stayed tightly within the projected range, opening just above $629, dipping to $626.19, and closing at a record $628.86. The move aligned perfectly with the forecast, as dip buyers defended support near $626.50 before price recovered. Resistance near $629–$632 remained firm, capping further gains. The strategy of buying dips into support proved effective once again, with technical levels offering clear intraday trade opportunities. The bullish bias played out as forecasted, even if gains were muted. The session underscored the model’s accuracy in identifying key levels and anticipating trader behavior.
Premarket Analysis Summary
In Tuesday’s premarket analysis posted at 7:34 AM, SPY was trading at $628.33 with resistance targets at $629.50, $631, and $635, and support at $628, $626.50, and $625. The bias level was marked at $629.50, and the outlook leaned bearish unless SPY could reclaim that level. The analysis favored short setups on rallies that failed below resistance, while noting stronger potential for long trades if price dipped toward $626.50 or $625. The tone emphasized caution, projecting downside pressure early in the session with a possibility of reversal near key support zones.
Validation of the Analysis
Tuesday’s market action validated the premarket roadmap well. SPY failed to sustain above the $629.50 bias level, instead selling off early toward the $626.50–$625 support zone. As flagged, buyers stepped in at that level, reversing the intraday decline. SPY rebounded toward $629 by afternoon and closed just shy of the bias level, a clear reflection of the push-and-pull dynamic outlined in the premarket commentary. Traders following the plan were rewarded for long trades near support and cautious shorts near resistance. Once again, the analysis offered reliable guidance and precise levels to trade from.
Looking Ahead
With no economic releases scheduled for Wednesday, all eyes will be on Alphabet and Tesla’s earnings reports after the bell. Their results could drive sentiment across tech and dictate broader market direction heading into Thursday. On Thursday, attention will shift to Unemployment Claims and PMI data, which may give investors a better read on the economic outlook. Until then, markets will likely trade in anticipation of those key catalysts, especially with tariffs and geopolitics still in the background.
Market Sentiment and Key Levels
SPY heads into Wednesday trading at $628.86, sitting just beneath resistance and supported by a consistent bid near $625. Sentiment remains cautiously bullish, with momentum still favoring buyers above that level. Immediate resistance lies at $630 and $632, with heavier supply expected near $635 and $638. Support is seen at $626.50, $625, and $624. The bulls remain in control while SPY holds above $625. A break below that level would invite further selling toward $621 or $615. With earnings volatility ahead, traders should watch these levels closely and prepare for sharp moves in either direction.
Expected Price Action
Our AI model projects SPY to trade between $625 and $633.75 on Wednesday, reflecting a moderately wide range that suggests choppy price action with bursts of momentum. This is actionable intelligence. The bullish bias remains intact, with potential to retest $630 and $632. A breakout above $632 opens the door to $635 and $638, but this area is expected to attract profit-taking. On the downside, a break below $625 would shift the tone toward $621 and potentially $615. Without economic data, movement will be headline-driven, and traders should remain nimble as earnings results hit the tape.
Trading Strategy
With SPY closing just under key resistance, long trades remain favored on dips toward $626.50 and $625, targeting moves to $630 and $632. If SPY breaks out above $632, upside targets become $635 and $638, but traders should expect resistance and consider tightening stops in that zone. Short trades may be taken if SPY fails to hold $625, with targets at $621 and $615. Given the prevailing bull trend, shorts are lower probability but viable if momentum breaks down. The VIX ticked down to 16.50, reflecting low volatility but also complacency. Traders should size conservatively and expect sharp reversals near resistance.
Model’s Projected Range
The model projects SPY’s maximum range for Wednesday between $624.50 and $633.75, with the Call side dominating within an expanding, yet narrow, 5-point band suggesting choppy price action punctuated by occasional trending moves. As projected on Monday, the market moved lower overnight, retesting the prior day’s lows before selling off at the open and falling to major support at $626.50. From there, it reversed to end the day unchanged. Notably, the close marked a new all-time high at $628.86. Strong earnings continue to drive price action, largely overshadowing concerns about tariffs. At the open, SPY traded just below $629 but failed to hold that level, triggering a morning drop toward $626. However, dip buyers stepped in once again at key support, lifting SPY back toward $629, where it hovered for much of the afternoon session. The all-time high close reinforces the prevailing bullish trend. As noted in recent weeks, dip buyers remain firmly in control, and the bulls haven’t surrendered ground since SPY reclaimed the $585 level. A close above $625 keeps bullish momentum intact and sets the stage for a potential move toward the $635–$638 range, where we expect meaningful resistance and likely profit-taking. Despite continued tariff-related uncertainty, the broader uptrend remains intact as long as SPY holds above $585. Key resistance levels heading into Wednesday are $633, $634, $636, and $638. Major support lies at $628, $625, $624, and $621. Momentum currently favors further upside, with overnight action likely to center around defending the $627 level. A failure to hold $627 could prompt a test of $625, and a decisive break below $625 would open the door to a deeper pullback toward $621 or even $615. While we continue to expect dip buyers to step in at key levels, our model turns bearish below $621. A break of $600 would significantly increase the likelihood of a retest of the $585 level. While this remains a low-probability scenario, early signs of potential weakness are emerging as we head into August. SPY closed above the lower edge of a redrawn bull channel stemming from the April lows, suggesting the uptrend remains intact, though possibly at a more measured pace. The $632–$639 resistance zone remains dense and could temper near-term upside. The market remains highly sensitive to macroeconomic data, bond yields, inflation readings, tariff developments, and fiscal policy shifts. Meanwhile, the VIX declined 0.90% to 16.50, reflecting a cautiously risk-on environment. We continue to recommend maintaining a hedge on long books at current levels using 90-day out-of-the-money VIX calls, given the expectation for elevated volatility in the months ahead.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI is currently in a narrow Ranging Market State, with SPY closing near the bottom of the range. Extended targets printed only briefly today during the early morning session as the market sold off. Otherwise, the day was mostly sideways with the MSI in very narrow ranges from the open. Overnight SPY retested the prior day’s lows with the MSI rescaling to a narrow bearish state. Extended targets in the premarket displayed the willingness of the herd to move prices lower. Yet by the open the MSI had rescaled to a very narrow bullish state which quickly failed, leading the MSI to rescale to a narrow bearish state which again, saw price decline to major support. But the MSI did not fall for the drop and instead remained in a very narrow bearish state without extended targets below which favored the reversal which developed at 10 am. The MSI stayed in this state until the afternoon session, rescaling to a narrow ranging and narrow bullish state, just to close back in the current narrow ranging state. This state implies more sideways consolidation for Wednesday as the market awaits an external catalyst to move price one way or the other. Our model favors SPY trade in a range overnight with MSI support at $628.94 and resistance at $629.22.
Key Levels and Market Movements:
On Monday, we wrote that “projected range has narrowed slightly, suggesting more sideways price action.” We also noted that “odds favor a SPY backtest of $628, which, if it holds, could support a move toward $635 or even $638. If $628 fails or doesn’t recover quickly, a drop to $626 becomes likely,” and added that “for Tuesday, we favor long setups above $626.” With this plan in hand and SPY opening just below $629, with the MSI in a narrow ranging state, one we typically avoid trading, we sat on our hands, waiting for SPY and the MSI to set up a trade. A quick drop, with the MSI rescaling to a narrow bearish state, didn’t tickle our fancy, so we waited. Price rebounded back to MSI resistance at $692.10 before finally giving way at 9:45 a.m. The MSI then rescaled to a bearish state, and with extended targets both below and at this level in the premarket, we entered short, looking for a test of at least the overnight lows. The first premarket level below was $626.50, which we set as our T1, and this target was realized quickly. We then set T2 at another premarket level of $625, but that wasn’t to be, as price staged a textbook failed breakdown at $626.22 just before 10 a.m. We waited for extended targets to stop printing and, per our plan, entered long at $626.75, targeting the premarket level of $628 as T1. This level was hit after 10:30 a.m., so we set T2 at MSI resistance at $628.34. It took a while, but the market eventually moved higher and reached our second target. With our stop at breakeven, there was nothing left to do but trail. We viewed the premarket level of $629.50 as a good final target, so we held through the afternoon's ups and downs, knowing we had a risk-free trade on. The MSI then rescaled higher and set resistance exactly at $629.50. On a failed breakout five minutes before the close, we exited our trailer and were pleased with the day’s results; two for two, with little to no heat on either trade. Once again, having a plan, executing with discipline, and trusting the MSI’s clear directional cues and timing, aligned with our broader market model and levels made the difference. The MSI remains a cornerstone of our consistent trading process.
Trading Strategy Based on MSI:
Wednesday brings no significant economic data, so trading is likely to be driven by emotion, FOMO, and fear until a new external catalyst emerges. The projected range has expanded slightly, suggesting continued sideways price action with some potential for trending movement. That said, we continue to expect the broader bullish trend to persist, supported by stronger-than-expected Q2 earnings and the potential for fresh highs. Odds favor SPY churning in a range overnight, with bulls aiming to defend $627. If that level holds, it could support a move toward $635 or even $638. However, if $627 fails or doesn’t recover quickly, a drop to $625 becomes likely, and a sustained break below $625 would open the door to a sharper move toward $621 or even $615. Our model is beginning to reflect a gradually rising probability of a 10–15% pullback in August, which may signal the end of the recent dip-buying dominance. Until that probability becomes actionable, we’ll continue to favor dip buys at major support levels and on failed breakdowns, as bulls remain firmly in control of the broader market. Traders should stay alert to any tariff-related headlines from the White House, but in their absence, we expect a slow grind higher with intermittent consolidation. The market’s resilience in the face of potential risks only reinforces the case for continued upside. While the MSI is currently in a Ranging Market State, the range remains too narrow to act on; watch for a rescale that could provide clearer directional cues. Longer term, for bears to gain meaningful traction, a decisive break below $600 would be required. For Wednesday, we favor long setups above $626, with potential short opportunities near $632 or on failed breakouts and breakdowns below $621, particularly if the MSI begins to weaken. As always, failed moves remain among the highest-probability setups. Stay nimble, avoid trades during Ranging Market States, and ensure full alignment with MSI. 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
Summary of Current Dealer Positioning:
Dealers are selling SPY $632 to $640 and higher strike Calls while buying $629 to $631 Calls indicating the Dealers desire to participate in any rally on Wednesday. The ceiling for tomorrow appears to be $633. To the downside, Dealers are buying $628 to $575 and lower strike Puts in a 3:1 ratio to the Calls they’re selling implying little concern that prices may move lower on Wednesday. Dealer positioning is unchanged from slightly bearish/neutral to slightly bearish/neutral.
Looking Ahead to Friday:
Dealers are selling SPY $631 to $645 and higher strike Calls while buying $629 to $630 Calls indicating the Dealers desire to participate in any rally into the end of the week. The ceiling for the week appears to be $640 but $638 also represents major resistance. To the downside, Dealers are buying $628 to $500 and lower strike Puts in a 6:1 ratio to the Calls they’re selling, reflecting a bearish outlook for the week. Dealers got more bearish late last week but have not added to their hedges this week. But with August 1st as another tariff deadline, and given the seasonally weak period for the market, Dealers are protecting from any potential downside which is showing up in our model. For the week Dealer positioning is unchanged from bearish to 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 continues to trade near resistance at $629 following a quiet session and a record close. Traders should continue to favor long setups on dips near $626.50 and $625 with upside targets at $630 and $632. If SPY clears $632, look for moves toward $635 and $638 where resistance is likely to increase. Short trades may be considered if SPY fails to break above $632 or loses $625, targeting downside levels at $621 and $615. Given the low VIX at 16.50, conditions remain stable, but with earnings on deck, volatility could return quickly. Use tight stops and size positions accordingly. 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!
