Market Insights: Wednesday, July 2nd, 2025

Market Overview

Stocks climbed again Wednesday, lifting the S&P 500 and Nasdaq to fresh all-time highs as investors responded positively to a newly announced trade agreement between the U.S. and Vietnam. This surprise development stoked hopes that additional deals could follow before the July 9 tariff deadline, reinforcing the recent cooling of global trade tensions. President Trump’s announcement of the Vietnam accord gave bulls more to cheer about after earlier breakthroughs with the UK and China. Meanwhile, expectations for Fed rate cuts firmed after the labor market showed new cracks. ADP reported a surprising loss of 33,000 private-sector jobs in June, the first decline in over two years and a major miss against forecasts of a 98,000 gain.

With momentum clearly building toward a more dovish Fed stance, traders now see rate cuts as more likely by September. CME data shows over 20% of investors already pricing in two cuts by that meeting. Tomorrow’s June jobs report will be a major test, likely shaping expectations for the Fed’s next steps. On Capitol Hill, Trump’s massive tax proposal, the “One Big Beautiful Bill”, narrowly passed the Senate following a tie-breaking vote from Vice President JD Vance. It now heads to the House, though internal Republican divisions could delay final approval. Despite that uncertainty, markets appear increasingly confident that a combination of easing trade tensions, slowing job growth, and political tailwinds may keep the bull run alive.

SPY Performance

SPY rose 0.44% on Wednesday to close at $620.39, breaking out of its recent tight range and nearing the upper end of its bullish channel. The ETF opened at $616.36 and climbed steadily throughout the day, topping out at $620.48 before easing slightly into the close. Volume was below average at 59.51 million shares, reflecting the holiday week lull. Still, the rally into the close and new all-time high print confirms bullish dominance and keeps the door open for further gains heading into Thursday's key jobs data.

Major Indices Performance

The Russell 2000 outperformed with a sharp 1.37% gain, followed by the Nasdaq, which surged 0.94% to a record close. The S&P 500 added nearly 0.5%, also closing at a new all-time high of 6,277.42. The Dow Jones Industrial Average lagged, finishing down 0.02%, weighed by weakness in a few key components. The rally was driven by renewed trade optimism following the U.S.-Vietnam deal, alongside mounting expectations for a Fed rate cut amid weak labor market data. Sector performance was mixed, with cyclicals and small caps leading, while defensives underperformed as the risk-on tone held firm.

Notable Stock Movements

Tesla rebounded sharply, jumping nearly 5% to lead the Magnificent Seven after reporting stronger-than-expected global production numbers for the second quarter, offsetting concerns around weaker sales. Apple also advanced following an analyst upgrade from Jefferies, adding support to the tech rally. In contrast, Meta, Netflix, Amazon, and Microsoft pulled back modestly, underscoring the continued rotation beneath the surface of the broader tech rally. Despite this divergence, strength in Tesla and Apple was enough to lift the Nasdaq to another record high, reinforcing the bullish tone across markets.

Commodity and Cryptocurrency Updates

Crude oil rallied 2.73% to settle at $67.26, climbing as supply disruptions eased and the broader risk-on mood pushed commodities higher. Despite the recent strength, our model continues to forecast a return toward the $60 level by year-end. Gold added 0.59% to finish at $3,369, extending gains as traders hedge ahead of Thursday’s key jobs report. Bitcoin rose 3.32%, closing just above $109,400, and remains comfortably above our long-only buy zone. The crypto space continues to benefit from softening rate expectations and broader bullish sentiment in risk assets.

Treasury Yield Information

The 10-year Treasury yield edged up 0.71% to 4.281%, still well below the red-zone threshold of 4.5% for equities. The modest rise reflects continued uncertainty around the Fed’s next move, though recent labor data has strengthened the case for rate cuts later this summer. As long as yields remain below 4.5%, equities are likely to retain support. However, traders should remain cautious; any surprise hawkish commentary from the Fed or stronger-than-expected data could reignite yield pressure and weigh on stocks.

Previous Day’s Forecast Analysis

Tuesday’s forecast projected SPY to trade between $615 and $621, with long trades favored above $615 and targets at $619, $621, and $624. The model emphasized that gains could be limited without a breakout, but that dips to support would be bought. Resistance at $621 was highlighted as a potential cap, while a drop below $615 could prompt tests of $610 or lower. The strategy called for disciplined long entries at key levels and caution ahead of the jobs report, reflecting the bullish yet data-sensitive environment.

Market Performance vs. Forecast

SPY opened at $616.36 and traded tightly early before surging through the $619 target and topping out at $620.48, just shy of the $621 level. It closed at $620.39, firmly within the projected range. The market respected the $615 support zone from the start, never threatening a move lower, and buyers stepped in near the bias level as forecasted. The model’s call for long setups on dips played out well, offering clean entries with minimal drawdown. Traders who followed the model had clear levels for entry and exit, and the rally into the close reaffirmed the value of disciplined execution based on the forecast.

Premarket Analysis Summary

In Wednesday’s premarket analysis posted at 8:02 AM, SPY was trading at $617.55 with a bias level at $617.25. The outlook leaned bullish but warned of possible exhaustion after recent gains. The model favored long entries near $616 and $617.25, with an initial upside target at $620.25 and a more optimistic stretch target at $624.25. The downside was limited to $612.75 and $610, only in the event of a failed hold above $616. Traders were advised to watch for strength above the bias level and rally confirmation before entering long trades.

Validation of the Analysis

Wednesday’s action validated the premarket blueprint nearly point for point. SPY never dropped below $616.61, holding above the bias level all day and confirming bullish control. The ETF pushed steadily toward the $620.25 target, hitting a high of $620.48 before easing slightly into the close. Long trades from the $616–$617.25 zone were highly effective, as projected. The model's expectation of reduced momentum near upper targets also played out, with price stalling just above $620. Premarket levels provided precise guidance once again, affirming the analysis as a powerful planning tool.

Looking Ahead

Thursday brings the all-important June Jobs Report and unemployment data, the final economic catalyst before Friday’s holiday closure. With ADP data showing unexpected job losses, markets will be highly sensitive to any surprise in the official numbers. A weak report may boost the case for imminent Fed cuts, lifting equities, while a strong number could dampen rate cut hopes and pressure stocks. Expect increased volatility around the release, and traders should prepare for wider intraday swings and potential trend reversals depending on the outcome.

Market Sentiment and Key Levels

SPY closed Wednesday at $620.39, riding the top end of its bullish channel and marking a new all-time high. Market sentiment remains firmly bullish as easing trade tensions, softening labor data, and firm support from macro trends continue to support equities. Key resistance now lies at $622, $625, and $626, with heavier congestion likely near the upper boundary of the $622–$626 zone. On the downside, key support levels are now $618, $616, $612, and $610. A break above $622 could open the door for a run to $626 or higher, while a failure to hold $618 may pull SPY back to $615 or below, particularly if economic data surprises to the downside.

Expected Price Action

Our AI model projects SPY to trade between $616 and $625 on Thursday. The wide range suggests potential for both choppy consolidations and trending bursts, especially around the release of the June jobs data. The bias remains bullish, with actionable intelligence favoring long trades as long as SPY holds above $618. Key upside targets are $622, $625, and $626. A clean breakout above $622 could lead to strong momentum into the holiday close. However, if SPY fails to hold above $618, expect potential tests of $616 and lower. A break below $610 could introduce short-term downside pressure, though the broader uptrend remains intact. As always, failed breakouts or breakdowns offer prime setups for intraday trades.

Trading Strategy

Traders should continue favoring long entries on dips near support zones at $618 or $616, targeting $622, $625, and potentially $626. If SPY clears $622 with momentum, look for an acceleration toward the upper end of the channel, but tighten stops to manage risk. Short trades remain a low probability but may be considered near $625 or $626 if clear rejection patterns form. A drop below $616 opens the door to test $612 and $610. With the VIX ticking lower to 16.65, volatility appears contained, but the jobs report could shift sentiment quickly. Reduce position size near economic releases and use stop-losses aggressively. In choppy markets, wait for failed moves to develop before entering trades. Stay nimble and align strategies with model levels to manage risk effectively.

Model’s Projected Range

The model projects SPY’s maximum range for Thursday between $614 and $626 with the Call side dominating within an expanding range, suggesting choppy price action punctuated by periodic trending moves. Today’s session broke out of the recent tight range, once again confirming bullish dominance with another all-time high. The market rallied into the close, putting $625 within striking distance as SPY ended the session at $620.45. While tariff-related uncertainties warrant cautious optimism, the broader uptrend remains intact as long as SPY holds above $585. On Thursday, bulls will look to defend the $618 level to pave the way for another leg higher. A failure to hold $618 could lead to a pullback toward $615, and a break below $615 may test $608. However, meaningful downside appears unlikely unless SPY breaches $600. Absent a major catalyst, our model continues to suggest that dips will be bought and the market will grind higher. We maintain our view that pullbacks represent buying opportunities. Resistance is now noted at $622, $625, $626, and $630, while support lies at $618, $616, $612, and $610. SPY remains above the lower boundary of the redrawn bull channel from the April lows and is currently within a micro channel. Micro channels are extremely strong and should not be faded. Resistance in the $622–$626 zone remains dense and may slow the uptrend as the market climbs higher. Conversely, a drop below $616 could introduce some downside risk, though still within the context of the broader uptrend. Market direction remains sensitive to macroeconomic indicators, bond yields, inflation data, tariffs, and fiscal policy, all of which will shape sentiment in the absence of a major catalyst. Meanwhile, the VIX fell 1.19% to 16.65, signaling reduced investor caution and a continued risk-on tone. Nevertheless, traders should remain nimble amid the potential for rising volatility.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a narrow Bullish Market State, with SPY closing well above MSI resistance turned support. There were no extended targets printing at the close, although for most of the day, extended targets printed above which signified the herd participating in the day’s rally. The MSI opened the day in a narrow bearish state with SPY bouncing off MSI support at $616.55. The MSI then rescaled higher and continued to rescale higher until 10:50 am when it stopped rescaling but began printing extended targets. This led to SPY slowly grinding higher with a late session push up into the close. Currently MSI support stands at $619.16 and lower at $618.50.
Key Levels and Market Movements:
On Tuesday, we noted: “no major economic news likely to disrupt the prevailing bull trend.” We added, “the market appears set to drift toward $621,” and reiterated, “holding $615 keeps the door open for a push toward $621.” With this actionable roadmap in hand and SPY opening above $617 while the MSI was in a narrow bearish state, there were no extended targets below. Unlike yesterday, our focus shifted to identifying long opportunities. That opportunity came on a failed breakdown in the premarket, allowing us to buy MSI support just after 9:35 am. Our first target was MSI resistance at $618, reached by 10:15 am. As MSI rescaled higher, we set our second target at the next MSI level of $618.50, placed a breakeven stop, and let the remaining 10% of our position trail. Referencing the premarket report, we targeted $620.25 as our final exit level. The market took its time but continued grinding higher throughout the day. With extended targets printing and no failed breakout pattern in sight, we held the runner until 3 pm, exiting just shy of $620.25 on a less-than-textbook failed breakout. Given the time of day and the shortened holiday week, we wrapped up satisfied, going one for one thanks to a clear plan, disciplined execution, and strategic use of MSI for directional clarity, timing, and actionable levels. Integrated into our broader framework, MSI remains an indispensable tool for consistent trading performance.
Trading Strategy Based on MSI:
Thursday brings the monthly Jobs Report, which has the potential to move the market in either direction. A weak reading would support the case for rate cuts, and with today’s ADP Employment Change report coming in very weak, it’s possible that tomorrow’s report could show job losses, potentially triggering earlier Fed action. Conversely, a strong employment report may delay rate cuts. For tomorrow, the mantra remains: trade what you see, as our models don’t have access to data before its release. Absent a macro catalyst, however, the market is likely to continue its upward grind. MSI printed extended targets virtually all day, and the slight pullback into the close is unlikely to reverse Thursday’s prevailing bull trend. As such, the market appears set to drift toward $625 and possibly $626, continuing to build on strong bullish momentum. The bulls remain in control, and holding above $618 should push the market beyond today’s highs. Volume was average for a shortened holiday week, reinforcing the trend. For bears to gain traction, a break below $600 would be necessary, though even that might produce only modest downside. With a close above $620, a move toward $625 and new highs appears increasingly likely. While external risks such as tariff headlines could shift sentiment, holding $618 keeps the door open for a push toward $625. A break below $618 could trigger a test of $616 and potentially attract sellers. Still, absent a meaningful breakdown, the path of least resistance remains higher. We continue to favor long setups above $616, while selective short opportunities may arise above $625 or on failed breakouts and failed holds below $600, especially when MSI signals weakening conditions. Failed moves continue to offer high-quality 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 $621 to $630 and higher strike Calls while also selling $618 to $620 Puts, indicating the Dealers belief that prices will continue to drift higher on Thursday with little downside risk. Dealers do not sell close to the money Puts unless they are confident price will move higher. The ceiling for tomorrow appears to be $625. To the downside, Dealers are buying $617 to $570 and lower strike Puts in a 2:1 ratio to the Calls they’re selling implying little concern that prices may move lower on Thursday. Dealer positioning is unchanged from neutral to neutral.   
Looking Ahead to Next Friday:
Dealers are selling SPY $621 to $640 and higher strike Calls while also selling $615 Puts, indicating the Dealers belief that prices will likely continue to move higher next week, or at a minimum, not fall beyond $615. The likely ceiling for the week is currently $625. To the downside, Dealers are buying $620 to $555 and lower strike Puts in a 2:1 ratio to the Calls they’re selling, reflecting a neutral outlook for the week. Dealer positioning is unchanged from neutral to 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

With SPY trading at new highs but facing dense resistance above $622, traders should remain focused on long entries at support levels near $618 or $616. Targets on the upside remain $622, $625, and $626, with further gains likely if Thursday’s jobs report confirms labor market softness. A clean break of $622 could trigger a swift move higher, but gains may be limited unless volume expands. Short trades may be considered at failed breakouts near $625 or $626, targeting $618 and $615. The VIX fell to 16.65, indicating reduced volatility, but upcoming economic data may quickly change the tone. Tighten stops near resistance and reduce size around the jobs report. Monitor price action closely during the initial reaction to the report, and stay prepared to shift direction if sentiment turns. As always, 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!