Market Insights: Wednesday, July 30th, 2025
Market Overview
Markets ended mixed on Wednesday as the Federal Reserve held interest rates steady and investors awaited key earnings reports. The Dow dropped about 0.4%, the S&P 500 slipped 0.1%, while the Nasdaq rose 0.2% as tech optimism held firm. Fed Chair Jerome Powell confirmed no rate changes were made at the July meeting, although two dissenting Fed governors preferred a 0.25% rate cut. Powell noted it’s still “early days” when assessing the potential impact of tariffs and made it clear no decisions had been made about a possible rate cut in September.
The central bank’s decision came alongside a wave of economic data. U.S. GDP grew at a solid 3% annual pace in the second quarter, rebounding from the first pullback in three years. Private sector job creation also surprised to the upside in July, suggesting the labor market remains resilient. In response, former President Trump renewed pressure on the Fed to act, stating that “Too Late” must now cut rates.
After the close, tech earnings took the spotlight. Microsoft stock surged 6% in after-hours trading thanks to strong top- and bottom-line results, particularly from its Intelligent Cloud segment. Meta followed with an even bigger move, jumping as much as 10% after beating expectations and lifting its forecast. Meanwhile, Robinhood delivered strong results of its own, benefiting from increased trading activity and new product offerings like tokenized stocks. Despite the Fed's steady hand, looming trade deadlines are back in focus. Trump confirmed that Indian goods will face a 25% tariff starting Friday, and with U.S.-China trade talks ending without a deal, markets remain on edge heading into the rest of the week.
SPY Performance
SPY edged down 0.11% to close at $634.57 on Wednesday, retreating from an open at $636.01 after hitting an intraday high of $637.67. The ETF found support at $631.55 before bouncing into the close. Volume rose to 70.95 million shares, well above average, as traders reacted to the Fed decision and awaited tech earnings. Despite the early breakdown below $635, bulls fought back to close near that key level, showing buyers remain active even amid increased volatility.
Major Indices Performance
The Nasdaq led the day with a modest 0.15% gain, helped by strength in tech ahead of earnings from Microsoft and Meta. The S&P 500 closed down 0.1%, and the Dow was the laggard, dropping 0.32% as trade tensions resurfaced. The Russell 2000 fell 0.43%, extending its recent underperformance and reflecting growing caution in small caps. While the broader tone was mixed, anticipation around Fed policy and strong tech earnings helped buoy sentiment late in the session.
Notable Stock Movements
The Magnificent Seven saw mixed action on Wednesday. Nvidia led with a gain of over 2.15%, while Microsoft and Alphabet also advanced slightly. On the downside, Apple, Tesla, Amazon, and Meta all finished in the red during regular hours. Meta's sharp post-close rally, however, flipped sentiment after hours. The divergence continues to reflect selective positioning as traders await clarity from tech earnings and macroeconomic updates. Investors are clearly rewarding innovation and AI strength while punishing laggards.
Commodity and Cryptocurrency Updates
Crude oil rose another 1.56% to close at $70.29 displaying typical summer strength, extending its recent bounce. Despite this short-term strength, our model still forecasts a move toward $60 by year-end. Gold declined 1.57% to $3,328, reversing its recent strength amid rising bond yields and reduced safe-haven demand. Bitcoin dipped 0.32% to hold just above $117,100, still locked in a consolidation pattern as crypto traders remain largely on the sidelines.
Treasury Yield Information
The 10-year Treasury yield rose 0.83% to 4.371%, continuing its upward trend and pushing closer to the 4.5% threshold that signals trouble for equities. A move above 4.8% would likely trigger more aggressive selling, and a breach of 5% could spark a significant correction. For now, yields remain a headwind, especially for growth stocks, but haven’t yet reached a level that completely derails equity momentum.
Previous Day’s Forecast Analysis
Tuesday’s forecast called for SPY to trade between $630 and $640, with a bullish bias above $635 and downside targets at $632 and $630 if that level failed. Upside levels were set at $640 and $643, with breakout potential toward $647. The model advised traders to look for short entries if SPY failed at key levels and warned of volatility surrounding the FOMC. The strategy highlighted the importance of support at $635 and emphasized profit-taking ahead of resistance.
Market Performance vs. Forecast
SPY opened at $636.01, climbed to $637.67, then fell to a low of $631.55 before closing at $634.57 landing squarely within the projected $630 to $640 range. The forecasted fade from early strength played out perfectly. The failure to sustain above $637 provided clear short opportunities, and the drop to $632 met the downside target before a sharp recovery into the close. The model accurately identified the importance of the $635 level, as its breakdown set up textbook trade setups for both shorts and tactical rebounds. Price action validated the strategy’s emphasis on a volatile, two-sided session.
Premarket Analysis Summary
In Wednesday’s premarket analysis posted at 6:55 AM, SPY was trading at $636.10, just above the bias level. The report highlighted $637 and $640 as key upside targets, while $636, $635.50, and $632 were outlined as support. The model anticipated a potential drift lower into the FOMC announcement, cautioning against trading the expected chop between $635.50 and $632. It also warned that failure to hold above the bias level would open the door to downside momentum. Traders were advised to avoid initiating positions in the choppy middle range and to watch for clear directional moves post-FOMC.
Validation of the Analysis
The day’s price action closely followed the premarket analysis. SPY initially touched the $637 upside target before failing to hold above it, triggering a selloff below $635. Price moved through $635.50 and tagged the $632 level highlighted as the expected downside target. After holding just below $632, SPY rebounded sharply into the close, confirming the premarket call that a break of $635 could trigger a dip toward $632 or $630. The warning to avoid trading within the $635.50 to $632 chop zone was well-founded, as that area proved volatile but indecisive. Traders who waited for the clean directional moves after the Fed announcement were rewarded.
Looking Ahead
Thursday brings the latest PCE inflation data and weekly jobless claims, two closely watched releases that could set the tone heading into Friday’s pivotal jobs report. A hotter-than-expected PCE could reignite rate hike fears, while softer data might bolster the case for cuts later this year. Either outcome could spur sharp moves in both equities and bond markets. Traders should expect continued volatility and remain nimble as the week’s major macro catalysts unfold.
Market Sentiment and Key Levels
SPY heads into Thursday’s session trading near $634.57, just under a key pivot zone. While bulls defended support at $632 and reversed into the close, the failed breakout above $637 shows waning momentum. Sentiment remains cautiously bullish, but weaker liquidity at $635 suggests it is no longer a major battleground. Resistance lies at $639, $640, $642, and $645, while support holds at $632, $630, and $626. Bulls need a clean break and hold above $640 to retest the highs, while bears will look to exploit any failed moves near resistance to drive a decline toward $630 or lower.
Expected Price Action
Our AI model projects SPY to trade between $632 and $644 on Thursday, suggesting trending price action with periods of consolidation. The bias remains bullish above $632, with resistance zones expected to cap near $640–$645. A breakout above $645 could spark additional upside, but profit-taking is likely. A failure at or below $632 would turn the outlook bearish, exposing $630, $628, and $626. Thursday’s PCE release will be critical to determining which path the market follows. Actionable intelligence suggests traders focus on major inflection points and avoid reactive trades in the wake of economic data.
Trading Strategy
Long trades remain favored above $632, with key upside targets at $639, $640, $642, and $645. A break and hold above $645 opens the door for $647, but traders should tighten stops as SPY nears resistance. Short trades may be considered if SPY fails to hold above $632 or breaks below $630, with targets at $628 and $626. Given the market’s sensitivity to macro news, especially PCE, traders should reduce position sizes and manage risk tightly. The VIX fell 3.32% to 15.45, still low by historical standards, but the steep contango suggests volatility could spike in the near future.
Model’s Projected Range
The model projects SPY’s maximum range for Thursday between $630.50 and $644 with the Call side dominating within a narrowing band suggesting trending price action with periods of consolidation. The wide trading range expected tomorrow is driven by the upcoming PCE release in the premarket. Overnight, the market moved sideways in a tight range, holding above the critical $635 level. A narrow band between $635 and $637 persisted through the session until the FOMC release. An initial spike higher trapped longs setting the stage for a swift drop below $635 to the $632 support level highlighted in yesterday’s newsletter. As noted previously, the $635 level had seen repeated tests and much of its liquidity had been exhausted. Consequently, we identified $632 as the next major support level, and today’s price action confirmed that call. SPY reversed sharply just below $632 and rallied strongly into the close, ending the day virtually flat. This week continues to bring a steady stream of economic data and earnings that could influence market direction. While the uptrend remains intact which is likely to extend absent any negative surprises, a healthy 5–10% pullback remains a realistic possibility. Since reclaiming $585, SPY has maintained a strong uptrend, and today’s close above $635 reinforces bullish momentum. This sets the stage for a test of the $640–$645 resistance zone, where we anticipate significant selling and profit-taking. Tariff-related headlines remain a key risk, but as that uncertainty recedes, investor focus will likely shift back to economic indicators, earnings, and valuations. Heading into Thursday, notable resistance levels are $639, $640, $642, and $645, while support lies at $635, $632, $630, and $626. Overnight action is likely to be influenced by earnings reported after the bell. Bulls will look to defend today’s lows, which we expect to hold on a retest. $635 is no longer a relevant trading level due to diminished liquidity. Despite today’s intraday pressure, the strong close suggests bulls remain in control, with dips continuing to attract buyers. While the Fed remains undecided on September rate cuts, the PCE and Friday’s Jobs Report will be critical in setting the near-term tone. A retest and hold of $632 would preserve the ultra-bullish structure. If $632 fails, look for support at $630, $628, and $626. A breakdown below $626 would shift our outlook bearish, with a drop under $600 significantly increasing the odds of a retest of $585. Seasonal volatility from August to October could provide bears with an opportunity. SPY closed just beneath the lower boundary of a redrawn bull channel from the April lows, reinforcing the prevailing strength in the trend. The $639–$645 zone remains a dense resistance band likely to cap near-term upside, while support below $635 has weakened. This suggests continued sideways-to-up movement, as long as $632 holds. Markets remain highly sensitive to macroeconomic data, bond yields, inflation, tariff developments, and shifts in fiscal policy. Meanwhile, the VIX fell 3.32% to 15.45. Although the tone remains broadly risk-on, the VIX term structure is now showing its steepest contango in years, an early signal that volatility could rise substantially in the coming months. We continue to recommend maintaining hedges on long positions at these levels, particularly through 90-day out-of-the-money VIX calls, as we anticipate heightened volatility heading into year-end.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI closed in a Ranging Market State, with SPY closing mid-range. Extended targets printed briefly in the morning session and after FOMC in the afternoon session as price moved to the lows of the day. Overnight the MSI remained in a bearish state and briefly rescaled to a bullish state after FOMC. Without extended targets above, this was a bull trap which resulted in SPY declining to the day’s lows. The MSI rescaled lower three times with extended targets indicating the herd was pushing price beyond the $635 major support level. But with 15 minutes left in the day session, extended targets stopped printing and SPY rocketed higher with the MSI rescaling to a ranging state which is where the market closed. After hours the MSI began rescaling higher to a Bullish Trending Market State due to strong earnings releases which implies higher prices overnight. At the close MSI support was $633.85 with resistance at $636.37.
Key Levels and Market Movements:
On Tuesday, we wrote: “We anticipate price action to hover around the $635 level heading into the FOMC announcement, with a grind and tight range likely leading up to the statement,” and added, “A retest of Tuesday’s lows may occur, but we expect that level to hold.” We further noted, “A common pattern around FOMC releases is an initial move that acts as a trap, followed by a reversal in the opposite direction.” With this plan in place and SPY opening just below $636 with the MSI in a narrow bearish state, we saw little opportunity to act early given the extremely tight overnight range. Anticipating sideways movement into the FOMC, we stayed patient and waited for the 2:00 PM ET release before initiating any trades. As outlined above, the initial post-FOMC reaction was a move higher toward major resistance just below $638. With no extended targets above and the MSI still showing only a narrow bullish state, we entered short on a textbook failed breakout at $637, setting our first target at $635.50, a premarket level more than $1 from our entry. That target was reached before 3:00 PM. With the MSI quickly rescaling lower to a wide Bearish Trending Market State and with extended targets beginning to print below, we held off on setting our second target until the MSI stabilized. We then identified $632.50 as T2. Although SPY attempted to break $632 three times, this was a key area where we anticipated bulls would defend. On a triple bottom at $631.75, we exited the remaining 10% of our position. While we considered an exit-and-reverse, we waited until extended downside targets stopped printing. Then, with SPY reversing higher, we entered long at $632.50. Our first target was MSI resistance at $633.85, which was realized with under five minutes left in the regular session. A quick final push into the close allowed us to exit our remaining 30% flat at the bell, locking in massive gains. Going two-for-two on the day came down to having a clear plan, executing with discipline, and trusting MSI’s directional cues, fully aligned with our broader market model and key technical levels. The result was a highly satisfying and well-structured trading session. The MSI remains a cornerstone of our consistent trading process.
Trading Strategy Based on MSI:
Thursday and Friday bring potentially even more impactful data, with PCE and the Jobs Report on deck. We expect the market to respond to these releases, so it's essential to trade what you see. Strong earnings from Microsoft and Meta overnight suggest a likely drift higher toward the $640 level, with new all-time highs possible ahead of the PCE release. However, once the data drops, it’s critical to remain reactive and flexible. MSI will be particularly useful here in gauging both the trend and its strength. A retest of today’s lows is possible if the PCE report runs hot, but we expect that level to hold on the first test. With a projected wide range, traders should be prepared for heightened volatility. Barring an external shock, which remains a real risk given the busy macro calendar, we expect the grind higher to continue, with $640 acting as a near-term magnet and $632 serving as the key support below. Bulls will aim to defend $632; if it holds, the path toward $640 becomes more probable. If $632 fails and doesn’t recover quickly, a move to $630 is likely, and a break below that could open the door to a deeper pullback toward $625. A meaningful decline remains a low-probability scenario unless $625 breaks. For now, we continue to favor buying dips at key support and failed breakdowns, as the broader trend remains firmly bullish. With the MSI closing in a Ranging Market State, we recommend waiting for directional cues from the MSI on Thursday before taking action. We continue to favor long setups above $632 while remaining open to tactical shorts near $640 or on failed breakouts and breakdowns below $632, especially if the MSI begins to show further weakness. 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 $660 and higher strike Calls while also buying $635 to $637 Calls indicating the Dealers desire to participate in any rally on Thursday. Dealers are also selling $627 Puts effectively putting a floor in the market at this level. The ceiling for Thursday appears to be $640. To the downside, Dealers are buying $634 to $525 and lower strike Puts in a 4:1 ratio to the Calls/Puts they’re selling/buying displaying some concern that prices could move lower on Thursday. Dealer positioning is changed from slightly bearish/neutral to bearish.
Looking Ahead to Friday:
Dealers are selling SPY $638 to $660 and higher strike Calls while also buying $635 to $637 Calls indicating the Dealers desire to participate in any rally into Friday. The ceiling for the week appears to be $645. To the downside, Dealers are buying $634 to $555 and lower strike Puts in a 4:1 ratio to the Calls they’re selling/buying, reflecting a bearish outlook for the week. Dealers have maintained their net bearishness for the week with the ratio displaying Dealers holding significant protection, albeit with less protection as we head into Friday. 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 bullish trend despite growing macro headwinds, but caution is warranted as markets digest the Fed decision and brace for PCE. Long trades are favored above $632 with upside targets at $639, $640, $642, and $645. Short setups may develop if SPY breaks below $632 or fails at $640, with downside targets at $630, $628, and $626. The VIX at 15.45 remains low, but the steep contango in the term structure suggests traders should be vigilant. Use tighter stops near resistance and consider trimming size ahead of major economic data. 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!
