Market Insights: Friday, July 25th, 2025
Market Overview
Stocks rallied again on Friday, with the S&P 500 logging its fifth straight record close and the Nasdaq notching another all-time high, as earnings and trade hopes kept investors bullish. Optimism surrounding recent deals and softening rhetoric from Washington helped sustain upward momentum. President Trump reassured markets by downplaying the possibility of removing Fed Chair Jerome Powell after an awkward exchange during a visit to the central bank’s $2.5 billion renovation site. The move eased fears of political interference with monetary policy, which had been weighing on sentiment.
The S&P 500 rose by 0.4%, continuing its stretch of record-setting sessions, while the Nasdaq gained nearly 0.3%. The Dow climbed 0.5%, now just 100 points shy of its own record high. Investor confidence grew after a trade agreement with Japan, with Trump now assigning a 50-50 chance of reaching a deal with the EU before the August 1 deadline. While concerns remain about the structure of profit-sharing on a proposed $550 billion US investment fund with Europe, the overall tone remains upbeat. Still, some on Wall Street are wary that the rally may be driven more by FOMO than fundamentals, especially with next week’s packed calendar of earnings from tech giants like Apple and Microsoft, the Fed’s rate decision, and key labor market data.
SPY Performance
SPY closed Friday up 0.42% at $637.10 after reaching a new intraday high of $637.53. The ETF opened at $634.60 and briefly dipped to a session low of $634.85 before gradually climbing higher throughout the day. Despite the modest percentage gain, SPY's continued strength underscores the resilience of the current trend. Trading volume was lower than average at 52.46 million shares, reflecting some hesitancy as traders eyed next week’s data-heavy schedule.
Major Indices Performance
The Dow led the major indices on Friday, rising 0.47% and pushing closer to its own record high. The Nasdaq followed with a 0.24% gain, buoyed by another solid showing in Big Tech. The S&P 500 posted a 0.42% advance, marking its fifth consecutive record close. The Russell 2000 trailed slightly with a 0.40% gain, continuing to reflect some rotation out of small caps. Market gains were broad-based but cautious, with most indices grinding higher rather than surging. While major sectors participated, defensive names remained subdued, suggesting the risk-on tone is still dominant despite pockets of profit-taking.
Notable Stock Movements
Tesla led the Magnificent Seven on Friday, jumping over 3.5% and reversing some of its prior losses. Microsoft, Alphabet, and Apple also posted gains, helping support the broader tech sector. The rest of the group ended slightly lower, reflecting selective enthusiasm as investors positioned ahead of next week’s major earnings reports. The strength in Tesla helped reignite risk appetite, particularly among growth-focused investors, while Microsoft and Alphabet continued to benefit from strong AI-related optimism. The mixed performance within the group underscores a shift toward quality over hype as the rally matures.
Commodity and Cryptocurrency Updates
Crude oil fell sharply, dropping 1.45% to settle at $65.07, reinforcing the model’s long-held view that oil prices are steadily on a path toward $60. The broader downtrend in energy continues to reflect concerns about global demand and excess supply. Gold dropped 1.05% to close at $3,338 as traders rotated out of safe havens in favor of equities. Meanwhile, Bitcoin slipped 0.86% to finish above $117,200, continuing its choppy but net-sideways trend as speculative interest remains somewhat muted compared to earlier this year.
Treasury Yield Information
The 10-year Treasury yield dipped slightly by 0.39% to close at 4.391%, just under the critical 4.5% threshold that often marks the tipping point for equity pressure. While yields remain elevated, the slight decline on Friday was viewed positively by equity markets. The current level is still seen as manageable, but traders remain acutely aware that a move above 4.8% could trigger broad selling, with 5.2% likely sparking a full correction. For now, yields remain supportive of the bullish equity narrative, though vigilance is warranted.
Previous Day’s Forecast Analysis
Thursday’s forecast projected SPY to trade between $632 and $638, with a bullish bias contingent on holding above $632. The model targeted upside levels at $637 and $640, while noting potential support at $632, $630, and $625. The strategy favored buying dips near support with a cautious tone near resistance, emphasizing that bulls remained in control unless $632 was breached. Resistance near $638 was expected to generate hesitation or profit-taking, and short trades were only recommended if a breakdown below $625 occurred.
Market Performance vs. Forecast
SPY traded precisely within Thursday’s projected range, opening at $634.60 and climbing to an intraday high of $637.53 before closing at $637.10. The model’s key bias level at $632 held firmly throughout the session, and upside resistance at $637 was reached but not decisively broken. This behavior aligned with the forecast’s warning of potential stalling near that level. Long trades off early support once again offered favorable outcomes, and resistance acted as a natural cap. With SPY staying within the expected $632–$638 band, the forecast proved highly accurate and offered a reliable blueprint for navigating the session.
Premarket Analysis Summary
In Friday’s premarket analysis posted at 6:58 AM, SPY was trading at $635.51 with a bias level identified at $636. The analysis favored long trades above that level, targeting $638 and potentially $639.50. A failure to maintain strength above $636 was expected to bring a retest of $633, with 631 seen as the likely session low. The note emphasized fragile momentum and anticipated resistance near $638, advising caution on stalled moves. The model highlighted strong support below $633 and a generally bullish tilt barring a sharp reversal.
Validation of the Analysis
Friday’s market action validated the premarket analysis with remarkable precision. SPY tested the bias level of $636 early and proceeded to reach the first upside target of $638, peaking just shy at $637.53. The resistance proved strong enough to stall the advance, as anticipated. No breakdown occurred, and SPY never dipped below $634.85, meaning downside support levels held firm. The cautious tone around resistance was well-placed, and the expected choppiness played out exactly as projected. Traders who followed the analysis found multiple intraday opportunities, especially around the $634 to $637 range.
Looking Ahead
The coming week kicks off with no scheduled economic data on Monday, but the calm won’t last long. Tuesday brings the JOLTS Job Openings report, followed by Wednesday’s ADP data and the highly anticipated FOMC policy decision. Thursday features PCE inflation data and jobless claims, with the monthly jobs report and PMI readings set for Friday. This dense calendar could drive increased volatility, and traders will need to stay nimble. Market momentum remains bullish heading into Monday, but the path forward may hinge on macro data and central bank messaging.
Market Sentiment and Key Levels
SPY enters Monday trading at $637.10, perched just below key resistance levels at $639 and $640. Sentiment remains bullish, supported by a strong technical uptrend and resilient buying interest. Major support is now at $634, followed by $632, $628, and $625. Bulls are clearly in control while SPY trades above $632, with any break below that level potentially shifting momentum toward consolidation or pullback. A breakout above $640 opens the path toward $645, though this area is expected to trigger heavy profit-taking. The market remains highly responsive to macro developments and is likely to stay sensitive heading into Wednesday’s FOMC.
Expected Price Action
Our AI model projects SPY to trade between $633.25 and $641.75 on Monday, an actionable intelligence range that suggests continued bullish but choppy trading. The bias remains bullish above $634, with upside targets at $639, $640, and $641. If SPY breaks through $641, we expect a run toward $645, where resistance should intensify. On the downside, a break below $634 could lead to a pullback to $632 or $628. A breach of $625 would likely shift the outlook to bearish. With a dense economic calendar ahead, expect sentiment to shift quickly based on data releases or Fed commentary. Traders should focus on failed breakouts or breakdowns to initiate trades while staying aligned with the broader bullish trend.
Trading Strategy
SPY continues to favor long trades on dips to $634 and $632, with upside targets at $639, $640, and $641. If SPY clears $641, momentum could carry the market to $645, but traders should tighten stops into strength to protect gains. Short trades remain viable only on failed breakouts above $641 or confirmed breakdowns below $625, targeting $622 and $620. The VIX fell to 14.93, reflecting a low-volatility, risk-on environment. However, with next week’s macro catalysts looming, traders should prepare for volatility to increase. Smaller position sizes are recommended near resistance, and traders should avoid overexposure until a clear trend reemerges post-FOMC.
Model’s Projected Range
The model projects SPY’s maximum range for Monday between $633.25 and $641.75 with the Call side dominating within a narrow, 4-point band suggesting choppy price action punctuated by occasional trending moves. Overnight, the market moved sideways in a tight range. This choppy action persisted after the open, but around 10:30 a.m., sentiment shifted as the market shrugged off potential trade negotiation risks and began a slow grind higher. By mid-afternoon, SPY notched another intraday all-time high at $637.58. Momentum remains firmly intact, with market participants largely dismissing risks. Since the April lows, the rally has been one of the strongest since 1950. Current models suggest SPY could rise an additional 10 to 15 percent over the next few months, potentially ending the year up 5 to 10 percent from current levels, targeting the $675 to $700 range. With bulls in firm control, dip buyers are quick to respond to even minor pullbacks. Although the daily streak of new highs appears extended, historical probabilities still favor a continuation of the current uptrend. Eventually, a consolidation phase will be needed to digest recent gains. But until there is a meaningful slowdown, the rally is likely to persist, particularly as markets historically generate positive returns for at least six months following rebounds of this magnitude. A 5 to 10 percent correction is expected at some point and would be healthy in removing excess froth. That said, markets rarely crash immediately after such strong upward moves. A more typical pattern involves slower gains and increased choppiness as volatility declines. Our models suggest that may already be unfolding, even as SPY prints fresh highs with volatility declining. Since reclaiming the $585 level, SPY has remained in a strong uptrend. With a close above $635, bullish momentum is confirmed, setting the stage for a test of the $640 to $645 zone, where we expect meaningful resistance and potential profit-taking. Tariff-related headlines remain a key risk, but as those uncertainties fade, market focus will likely return to fundamentals: economic data, earnings, and valuations. Key resistance levels heading into Monday are $639, $640, and $641, with major support at $634, $632, $628, and $625. Price action in the near term will likely revolve around the $634 level. A pullback to this area could offer a buying opportunity. However, a break below $634 may trigger a move to $632, an important support zone. A successful defense of $632 would keep the ultra-bullish scenario intact, with upside targets above $640. If $632 fails, next support lies at $628, then $625, with a breach below $625 turning our model bearish. A break below $600 would significantly raise the likelihood of a retest of the $585 level. Although early signs of potential weakness emerged last week, the strength of recent sessions has tempered those concerns. Seasonal volatility could reemerge post-FOMC and between August and October, giving bears a potential window, but our models currently assign a low probability to that outcome. SPY continues to trade above the lower boundary of a redrawn bullish channel from the April lows, confirming trend strength. The $638 to $642 resistance band remains dense and may cap near-term upside. Markets remain sensitive to macroeconomic data, bond yields, inflation readings, tariff news, and shifts in fiscal policy. Meanwhile, the VIX fell 2.99 percent to 14.93, reflecting a sustained risk-on tone, suggesting more sideways action and less trend-driven movement in the weeks ahead. We continue to recommend maintaining hedges on long positions at these levels, particularly through 90-day out-of-the-money VIX Calls, as we expect volatility to pick up later this quarter.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI is currently in a wide Bullish Trending Market State, with SPY closing in the upper range. Extended targets printed for much of the day once the market broke out of its overnight range. The MSI rescaled higher several times and continued to show the herd was participating in today’s trend. Overnight the MSI did little but remained in its bullish state. By the open the MSI has rescaled a bit lower but remained bullish. This kept prices contained until 10:48 am when the MSI began a series of rescalings higher with extended targets leading the way. A few brief prints of extended targets forewarned the moved to another new all-time high for the broader markets. By the late afternoon, extended targets stopped printing and price pulled back ever so slightly to close at a record $637.10, again reinforcing the strength of the bull trend. Overnight our model suggests SPY may pull back and consolidate to a low of $634 however with the MSI in a wide bullish state, prices on Monday are not likely to decline significantly from the current levels without an external catalyst. MSI support is currently $635.05 with resistance at $637.35.
Key Levels and Market Movements:
On Thursday, we wrote, “the market is likely to continue its recent pattern grinding higher.” We also noted, “Overnight, we expect SPY to churn within a range, with bulls aiming to defend the $634 level. If that support holds, it could pave the way for a move toward $640,” and added, “Our preference is for long setups above $632, with potential short opportunities near $638.” With this plan in hand and SPY opening just above $635 at MSI resistance, we looked for any opportunity to go long. While we don’t typically initiate trades from MSI resistance, a triple bottom at our key $635 level triggered a long entry at 10 a.m., with an initial target at the premarket level of $636. T1 was reached quickly. With MSI rescaling higher and extended targets in play, we then looked to the MSI for our second target. As it adjusted slightly upward, we exited T2 at $636.40 and opted to trail the remainder, anticipating a possible move to $638. As MSI continued to rescale higher, we held the position as a risk-free trade with a stop at breakeven. By late afternoon, SPY began to stall near $637.50, and extended targets stopped printing, prompting us to close the final 10% of the position at $637.50 and call it a day. One and done on a very strong week with no losing trades thanks to having a clear plan, executing it with discipline, and trusting the MSI’s directional cues in alignment with our broader market model and key levels. The MSI remains a cornerstone of our consistent trading process.
Trading Strategy Based on MSI:
Monday brings no major economic news, so the market is likely to continue its recent pattern of grinding higher within the steep, uncorrected channel that has persisted since the April lows. While tariff headlines or other unexpected developments could disrupt this path, in the absence of a new external catalyst, we expect more of the same until Wednesday’s FOMC meeting. Emotion and FOMO continue to drive price action, and with the projected range narrowing slightly, the sideways-to-up bias remains intact. The broader bullish trend is supported by stronger-than-expected Q2 earnings and a steady stream of new highs as volatility continues to bleed out of the market. Overnight, we expect SPY to churn within a range, with bulls aiming to defend the $634 level. If that support holds, it could pave the way for a move toward $640. However, if $634 breaks and fails to recover quickly, a drop to $632 is likely, and a sustained move below that could open the door to a deeper pullback toward $625. That said, any meaningful pullback still appears to be a low-probability outcome, so we continue to favor dip buying at major support levels and on failed breakdowns, as bulls remain firmly in control of the broader trend. While traders should stay alert for tariff-related headlines out of the White House, the market’s resilience in the face of potential risks only reinforces the case for continued upside. With the MSI currently in a Bullish Trending Market State, we expect slightly higher prices on Monday. Our preference is for long setups above $632, with potential short opportunities near $638 or on failed breakouts and breakdowns below $625, 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 $638 to $646 and higher strike Calls implying the Dealers belief that prices may begin to stall at these levels on Monday. Once again Dealers nailed the positioning for today. The ceiling for Monday appears to be $640. To the downside, Dealers are buying $637 to $600 and lower strike Puts in a 3:1 ratio to the Calls they’re selling implying little concern that prices may move lower on Monday. Dealer positioning is unchanged from slightly bearish/neutral to slightly bearish/neutral.
Looking Ahead to Next Friday:
Dealers are selling SPY $638 to $660 and higher strike Calls while selling $632 Puts in small size, while also buying $640 Calls in large size indicating the Dealers belief that prices will not decline beyond $632 next week. Dealers only sell near the money Puts when they are confident in higher prices. Dealers are also buying $640 Calls so Dealers are looking to participate in any breakout above this level. The ceiling for the week appears to be $645. To the downside, Dealers are buying $637 to $555 and lower strike Puts in a 6:1 ratio to the Calls they’re selling/buying, reflecting a bearish outlook for next week. Dealers however, have not increased their hedges all week and this ratio is likely more a reflection of protection as opposed to bearish concerns. 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 remains in a strong uptrend, closing firmly above $635 and showing consistent bullish momentum. Long trades continue to offer the highest probability of success on dips to $634 and $632, targeting $639, $640, and $641. A breakout above $641 could trigger a run to $645, but expect increased resistance in that zone. Short trades should be considered only if SPY fails to hold $632 or breaks below $625, with targets at $622 and $620. With the VIX falling to 14.93, complacency is rising, but next week’s economic slate could reverse this quickly. Manage position size conservatively and protect profits heading into volatile macro events. Be sure to 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!
