Market Insights: Thursday, July 31st, 2025
Market Overview
Markets slipped Thursday as July ended on a cautious note, with investors eyeing President Trump’s looming tariff deadline and Friday’s pivotal jobs report. Despite strong earnings from Microsoft and Meta, sentiment cooled as the S&P 500 dropped 0.4%, the Dow sank 0.7%, and the Nasdaq slid just below flat, reversing earlier gains. After a month marked by repeated all-time highs, the S&P 500 and Nasdaq still posted gains of 2.3% and 3.7% respectively, while the Dow ended July roughly unchanged.
Traders recalibrated positions heading into a packed end-of-week calendar. Friday’s tariff changes are expected to reshape U.S. trade relations, with Trump confirming a 90-day extension of tariffs on Mexican goods while finalizing terms with other key partners. Meanwhile, Thursday’s PCE inflation data showed price pressures ticking higher in June, reaffirming that inflation remains above the Fed’s 2% target. That came just one day after the Fed held rates steady, with Chair Jerome Powell stressing that no decisions had been made about a rate cut in September. Rate cut bets fell to under 40%, down sharply from 60% earlier in the week.
Still, earnings continued to shine. Meta stock exploded 11% higher after a strong beat and raised guidance, as its AI investments gain traction. Microsoft also impressed, briefly surging 8% before paring gains as it crossed the $4 trillion market cap threshold. After the bell, Amazon reported stronger-than-expected Q2 results, with AWS growth of 17% and guidance topping estimates. The company posted EPS of $1.68 on $167.7 billion in revenue, both beating expectations. As the market digests Trump’s trade stance and prepares for Friday’s jobs report, focus will shift to economic fundamentals, corporate outlooks, and whether the July rally has legs into August.
SPY Performance
SPY fell 0.38% on Thursday to close at $632.08, marking a weak finish to the month after failing to hold early gains. The ETF opened at $639.46 and briefly traded near $640 before sliding to an intraday low of $630.77. Volume spiked to 92.86 million shares, well above average, reflecting strong participation ahead of Friday’s economic catalysts. Despite strong overnight gains driven by tech earnings, SPY failed at resistance and reversed sharply, closing near critical support. Thursday’s close leaves bulls with a tough test heading into Friday’s session.
Major Indices Performance
The Nasdaq fared best among major indices on Thursday, finishing nearly flat at -0.03% after early gains faded. The S&P 500 dropped 0.4%, while the Dow lagged with a sharp 0.74% decline. The Russell 2000 was hit hardest, losing 0.89% as small caps continued to underperform in risk-off conditions. The broader market struggled to hold gains despite strong tech earnings, with concerns over tariffs and inflation dragging on sentiment. Traders grew cautious as Friday’s jobs report and escalating trade tensions introduced fresh uncertainty into an already data-heavy week.
Notable Stock Movements
Meta led the Magnificent Seven with an 11% gain after blowout earnings and upbeat guidance. Amazon and Microsoft also posted gains, helping offset losses elsewhere. Tesla was the worst performer, falling more than 3.38%, while Apple and Alphabet slipped modestly. The split performance highlights ongoing rotation within mega-cap tech, with investors rewarding strong AI execution and guidance while punishing underperformance. Sentiment remains tightly linked to earnings reactions and broader macro signals.
Commodity and Cryptocurrency Updates
Crude oil dropped 1.34% to $69.35 as seasonal strength faded. While traders have focused on supply risks, including ongoing concerns about Russian exports, crude pulled back today as our model continues to forecast a drop toward $60 by year-end. Gold rebounded 0.43% to $3,289, stabilizing after Wednesday’s sharp selloff. Bitcoin slid 1.77% to close just above $115,700, remaining under pressure as the recent rangebound behavior gives way to mild bearish sentiment.
Treasury Yield Information
The 10-year Treasury yield edged up 0.23% to 4.382%, continuing its grind higher and keeping pressure on growth stocks. While still below the 4.5% level that often triggers broader equity selling, the yield’s steady rise reflects ongoing concern about inflation and Fed inaction. If yields rise above 4.8%, markets could face deeper corrections. For now, yields remain a growing headwind, particularly for tech and high-multiple names.
Previous Day’s Forecast Analysis
Wednesday’s forecast projected SPY to trade between $632 and $644 with a bullish bias above $632, highlighting resistance at $640–$645 and support at $632, $630, and $626. The model expected trending action with volatility driven by the PCE release. Upside breakout targets were capped near $645, while a break of $632 would turn the outlook bearish with potential downside to $630 or lower. The strategy recommended longs above $632 and shorts below, cautioning against overexposure into macro events.
Market Performance vs. Forecast
SPY opened at $639.46 and briefly reached $639.85, just shy of the $640 resistance before failing and falling to $630.77. It closed at $632.08, hitting both the projected low and the lower end of the range. The move below $632 tested but did not break key support, in line with the model's call. The fade from early strength and strong selloff offered clear short setups near resistance. SPY’s rejection from the $640 zone and retest of $632 validated the forecast, with the range and turning points playing out almost perfectly. The call for a trending session around the PCE release proved spot on.
Premarket Analysis Summary
In Thursday’s premarket analysis posted at 6:57 AM, SPY was trading at $640.52 with upside potential to $645 and noted support levels at $640, $638, $637, $635, and $633. The analysis emphasized holding above $640 to sustain a push toward $645, but warned that losing $640 could lead to a slide down to $637 or even $633 if profit taking kicked in. The tone was cautious, noting the rally lacked strength and could stall, especially ahead of Friday’s macro releases.
Validation of the Analysis
The market followed the premarket blueprint nearly step for step. SPY traded above $640 briefly at the open but failed to extend gains, peaking at $639.85 before slipping sharply. Once $640 gave way, downside momentum accelerated, with the ETF falling to $630.77 before stabilizing near $632. The projected targets of $637 and $633 were hit as the selloff deepened, confirming the downside path described in the premarket report. Traders who shorted failed moves near $640 or used $638 as a pivot found strong intraday setups, reinforcing the accuracy and utility of the premarket plan.
Looking Ahead
Friday brings the highly anticipated monthly Jobs Report and updated PMI readings. With inflation data out of the way, the labor market takes center stage as investors gauge whether the economy is still running too hot for the Fed to consider rate cuts. A strong report could send yields higher and pressure equities, while soft data might revive dovish hopes. Either way, Friday’s session could be highly volatile. Traders should brace for sharp swings in both bonds and equities as the week’s final macro catalyst unfolds.
Market Sentiment and Key Levels
SPY enters Friday’s session trading at $632.08, a level that marks the line in the sand for bulls. Sentiment has turned cautious after a sharp intraday reversal and close near support. If bulls can defend this area, we could see another push toward $640, with resistance stacked at $633, $635, $638, and $640. However, if $632 fails, bears could quickly drive SPY to $630, $625, or even $620. While tech earnings remain supportive, macro risks are building. Market momentum is clearly stalling below resistance, and traders must remain nimble heading into a data-heavy session.
Expected Price Action
Our AI model projects SPY to trade between $628 and $640 on Friday, indicating a wide and volatile session driven by macro catalysts. With the Put side dominating and the trend expanding, traders should expect directional moves rather than choppy action. The bias leans slightly bearish below $632, but the market could still recover if this level holds. A break and hold above $638 could trigger a retest of $640 and $645, though we expect profit-taking there. A break below $630 opens the door to $625 or lower. Actionable intelligence suggests trading with the trend and avoiding impulsive trades following the jobs report release.
Trading Strategy
Traders should look for long setups above $632, with upside targets at $633, $635, $638, and $640. If SPY holds above $640, a move toward $645 becomes possible, but gains may be capped by profit-taking. If SPY breaks and holds below $632, shorts are favored with targets at $630, $625, and $620. With the VIX rising 8.01% to 16.72, volatility is back and position sizes should be adjusted accordingly. Use tight stops near support and resistance, and watch for failed moves as trade setups. Avoid overtrading ahead of the jobs report and prepare for strong post-release swings.
Model’s Projected Range
The model projects SPY’s maximum range for Friday between $626.50 and $643 with the Put side dominating within a wide and expanding band suggesting trending price action on Friday, due to the Jobs report and tariff deadline. Overnight, markets surged on strong earnings from Meta and Microsoft, with SPY hitting new intraday highs at $642. While SPY held onto most of these gains into the open, sentiment quickly reversed, driven by renewed fears over tariffs and concerns that the Fed is in no hurry to cut interest rates. These worries erased all overnight gains, and SPY ultimately closed lower on heavy volume, landing at critical support near $632. This is the bulls' line in the sand. While it held on a retest into the close, the real test lies ahead: can the bulls defend this level and resume the uptrend? A session that makes new highs but closes at the lows on heavy volume is often an ominous signal. A 5–10% pullback remains a realistic risk. Since reclaiming $585, SPY has been in a strong uptrend, but today’s close has drawn attention from the bears, who will likely get more involved if $632 breaks. If this level holds, dip buyers are expected to step in, potentially pushing the market toward the $640–$645 resistance zone, a level we previously identified for potential profit-taking, which played out today. Tariff-related headlines continue to pose risk, but as that fades, investor focus will return to fundamentals like earnings, economic data, and valuations. Heading into Friday, key resistance levels are $633, $635, $638, and $640, with support at $630, $625, and $620. Below $625, there's little to prevent a rapid sell-off. In the absence of a major catalyst, overnight action may drift lower and then trade sideways ahead of the monthly jobs report, which could offer insight into consumer strength. Bulls will look to defend the $632 low, but whether it holds is uncertain. As such, we’re not buyers here as macro risks remain too elevated, and a $10 move in either direction is on the table. For Friday, trade what you see. While SPY remains above $625, bulls retain the upper hand, and they are likely to step in again on dips. However, if $632 fails, look for support at $630 and $625. A breakdown below $625 would shift our view bearish and raise the likelihood of a drop below $600, significantly increasing the odds of a retest of $585. Seasonal volatility from August to October could further favor the bears. SPY’s close below the lower boundary of a redrawn bull channel from the April lows suggests the need for a technical reassessment. The $638–$645 zone remains a dense resistance band, likely to cap near-term upside, while support below $630 has weakened substantially. Markets remain highly sensitive to macroeconomic data, bond yields, inflation, tariff developments, and fiscal policy shifts. Meanwhile, the VIX rose 8.01% to 16.72. Although the broader tone still appears risk-on, the VIX term structure is showing its steepest contango in years, an early signal that volatility could rise notably in the months 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 anticipate heightened volatility heading into year-end.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI closed in a Bearish Trending Market State, with SPY closing below support turned resistance. Extended targets printed into the close. Overnight the MSI rescaled to a narrow bullish state but with extended targets above, price moved to new intraday highs at $642. By the open the MSI had stopped printing extended targets indicating the herd was stepping back from the day’s lofty levels. And sure enough, SPY fell with the MSI rescaling to a ranging state and then several rescales lower to a bearish state. The current bearish MSI range is narrow which implies some potential downside overnight but not a complete collapse of prices. With the Jobs report due premarket, traders are likely waiting for that information to be released before pushing price one way or the other. MSI resistance is currently $633.53 and higher at $635.48.
Key Levels and Market Movements:
On Wednesday, we wrote: “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,” and added, “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.” We also noted: “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.” With that plan in place, SPY opened just below $640, and with the MSI in a narrow bearish state with no extended upside targets, long opportunities were off the table, shifting our focus to a potential sell setup. A textbook failed breakout in the premarket hinted at weakness, though intraday patterns were less clear. We decided to sell at MSI resistance at $639.15 after a break of MSI support, placing a stop above the overnight highs. Perhaps we were lucky, but the market ultimately rejected the overnight euphoria, likely due to looming macro risks, and SPY sold off sharply. We initially set T1 at MSI support near $634.85, though we considered taking profits at the premarket level of $637. The speed of the decline gave us confidence to aim lower, and by 1 PM, we reached T1. As MSI rescaled lower, we set T2 at the premarket level of $633 and trailed from there. We held through a textbook failed breakdown, which tested but didn’t breach the prior day’s lows. Since $632 was the level where we expected bulls to step back in, we exited just below that into the close, capping off a one-and-done, high-conviction trade driven by a clear plan, disciplined execution, and alignment between MSI’s directional cues, 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:
Friday brings potentially even more impactful data with the PCE and Jobs Report, and we expect the market to respond sharply to these releases, making it essential to trade what you see. After printing a new high and closing at the lows, bulls have been dealt a blow while bears are starting to dip their toes in. Though the broader narrative remains in favor of the bulls, $632 now stands as the key line in the sand: above it, price has room to move higher; below it, we could see levels not visited since mid-July. As the data hits, remaining reactive and flexible is critical. With a projected wide range, traders should brace for heightened volatility. Barring an external shock, a real risk given the busy macro calendar, we expect bulls to defend $632 and attempt another push higher. However, it's likely that price hovers near current levels in the premarket, with the potential for $10 swings in either direction after the Jobs Report. If $632 holds, a move toward $640 becomes more probable. If it fails and doesn’t recover quickly, $630 becomes the next likely stop, with a break below that opening the door to a deeper pullback toward $625. While the odds of a meaningful decline have increased, it remains a lower-probability scenario unless $625 breaks cleanly. For now, we continue to favor buying dips at key support and failed breakdowns after the market picks a clear direction tomorrow. 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 $650 and higher strike Calls while also buying $633 to $637 Calls indicating the Dealers desire to participate in any rally on Friday. Dealers are no longer selling close to the money Puts. The ceiling for Friday appears to be $643. To the downside, Dealers are buying $632 to $525 and lower strike Puts in a 4:1 ratio to the Calls they’re selling/buying displaying some concern that prices could move lower on Friday. Dealer positioning is unchanged from bearish to bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $638 to $660 and higher strike Calls while also buying $633 to $637 Calls indicating the Dealers desire to participate in any rally next week. The ceiling for the week appears to be $640. To the downside, Dealers are buying $632 to $555 and lower strike Puts in a 4:1 ratio to the Calls they’re selling/buying, reflecting a bearish outlook for next week. Dealers have maintained their net bearishness for the week with the ratio displaying Dealers holding significant protection. 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 is at a critical support level following Thursday’s reversal, and with Friday’s jobs report on deck, caution is key. Long trades are favored only if SPY holds above $632 with upside targets at $635, $638, and $640. Short trades may develop if SPY breaks below $632, with targets at $630, $625, and $620. The VIX closed at 16.72, up sharply and signaling a return of volatility. Position sizing should be reduced and stops should be tight near key levels. Watch for sharp moves post-data and adjust strategies accordingly. 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!
