Market Insights: Wednesday, August 13th, 2025
Market Overview
Stocks climbed for a second straight session Wednesday as the S&P 500 and Nasdaq notched back-to-back record highs, bolstered by a surge in Federal Reserve rate cut expectations. The Dow Jones led the way, jumping more than 450 points, or 1.04%, putting it within striking distance of its all-time high set last December. The rally came as traders grew increasingly confident that the Fed will move to cut interest rates at its next meeting, especially after Tuesday’s cooler-than-expected CPI data.
By Wednesday afternoon, CME Group data showed traders fully pricing in a September rate cut, with a growing number betting on a “jumbo” 50 basis point move. Treasury Secretary Scott Bessent added fuel to the fire, urging the Fed to cut rates by up to 175 basis points, beginning with a 50 basis point cut next month. That call came amid rising signs of labor market weakness and renewed political pressure on the central bank. In corporate headlines, several high-flying names took a hit. Circle dropped after announcing a 10 million share sale following its first earnings since going public. Cava also sank after slashing its full-year sales outlook, while CoreWeave cratered as its operating income outlook deteriorated despite strong AI-related revenue.
Still, market sentiment stayed broadly positive, driven by easing inflation fears and growing conviction that the Fed will soon begin cutting rates. Traders are now eyeing Thursday’s PPI data and Friday’s retail sales for the next signals on where inflation and demand are headed.
SPY Performance
SPY added 0.35% to close at $644.91 after opening at the same level and trading in a relatively narrow range throughout the day. It reached a high of $646.19 and dipped to a low of $642.69 before closing right where it started, marking another all-time high close. Volume came in at 55.83 million shares, slightly below average, but the strong close at new highs continued to validate the uptrend, with bulls defending key levels and positioning for another possible leg higher.
Major Indices Performance
The Russell 2000 led the charge with a gain of 2.01%, continuing its breakout amid increased risk appetite and optimism that smaller, rate-sensitive companies will benefit from easier monetary policy. The Dow Jones surged 1.04%, adding more than 450 points and coming within range of its record highs. The S&P 500 climbed 0.35%, while the Nasdaq lagged with a modest 0.14% gain. While large caps cooled, the rally continued to broaden, with cyclicals and small-caps stepping into leadership roles. Defensive sectors lagged as investors continued to rotate toward higher-beta plays.
Notable Stock Movements
It was a mostly red day for the Magnificent Seven, with only Apple and Amazon posting gains. Apple rose 1.58%, continuing to build strength after recent consolidation, while Amazon added 1.39% on follow-through momentum from recent earnings. The rest of the group dipped slightly, reflecting some profit-taking after a powerful two-day surge. The divergence shows a slight pause in mega-cap momentum, though broader bullish sentiment remains intact.
Commodity and Cryptocurrency Updates
Crude oil fell another 0.66% to settle at $62.75, inching closer to our model’s long-standing downside target of $60. Gold climbed 0.25% to $3,407, recovering some recent losses as inflation expectations remain contained. Bitcoin jumped 2.03% to close above $122,600, maintaining its bullish structure alongside rising risk sentiment in equities.
Treasury Yield Information
The 10-year Treasury yield dropped 1.67% to close at 4.236%, extending its move below the 4.5% mark. This drop in yields continued to support equity prices and rate-sensitive sectors. The decline eases pressure on growth stocks and reassures investors that borrowing costs may remain manageable, especially with growing odds of a Fed rate cut on the horizon.
Previous Day’s Forecast Analysis
Yesterday’s forecast called for SPY to trade between $641 and $648 with a bullish bias above $641, targeting $645 and $648. Support levels were seen at $640, $635, and $632. Longs were favored on dips above $641, with caution advised around failed breakouts near $645. The model expected early consolidation and a possible afternoon breakout, particularly if bullish sentiment persisted. Traders were encouraged to seek long setups above key support and watch for signs of exhaustion near resistance.
Market Performance vs. Forecast
SPY opened and closed at $644.91, after reaching an intraday high of $646.19 and a low of $642.69, a range that aligned closely with the forecast. The actual price action respected the bullish bias above $641 and tested the projected resistance at $645, even briefly exceeding it. The model’s upside targets of $645 and $648 are now within reach, with Wednesday’s late-day strength keeping momentum alive. Traders who followed the model’s guidance had multiple opportunities to take long setups on dips, and the narrow but consistent range confirmed the expected two-way price action. The forecast correctly predicted consolidation followed by an afternoon move higher.
Premarket Analysis Summary
In today’s premarket analysis posted at 8:02 AM, SPY was trading at $644.14 with a bullish bias above $641. The upside targets were $645.65 and $650, with downside targets noted at $641, $640, and $637.65. The plan called for continuation of the post-CPI uptrend as long as SPY stayed above $641, with expectations for dips to be bought. While a full move to $650 was seen as unlikely, momentum toward $645.65 was favored, provided buying pressure remained strong.
Validation of the Analysis
The premarket analysis held up well, with SPY holding firmly above the bias level of $641 all day and reaching the first upside target of $645.65 by mid-morning. Although the second target at $650 wasn’t tested, the session played out nearly as expected, with modest dips that were quickly bought and a late push to new closing highs. Traders who aligned their strategies with the premarket levels were rewarded with solid long setups throughout the day. The analysis again proved reliable, accurately capturing the tone and structure of the session.
Looking Ahead
Thursday brings fresh economic data with the release of Core PPI, headline PPI, and weekly unemployment claims. These numbers are expected to provide new insights into inflation trends and labor market strength, and they could either bolster or temper expectations for a September rate cut. With sentiment currently leaning bullish, the market will be watching closely to see if the data aligns with the dovish shift already priced in.
Market Sentiment and Key Levels
SPY closed at $644.91, keeping bulls firmly in charge heading into Thursday. The strong uptrend remains intact, with short-term resistance now at $645, $648, and $650. On the downside, support lies at $642, $640, $638, and $636. As long as SPY holds above $638, the dip-buying trend should continue. A break above $650 could unleash a sharper move higher, while a sustained drop below $636 would increase the odds of a pullback toward $630. Bulls are controlling the tape for now, but traders should stay alert as volatility may increase with Thursday’s PPI release.
Expected Price Action
Our AI model projects SPY to trade between $641 and $648 on Thursday, a range suggesting more sideways consolidation with intraday breakouts possible. The market maintains a bullish bias above $642, targeting $645 and $648. If SPY breaks above $648, the next stretch target is $650. However, if SPY loses $642, a move to $638 or $636 becomes more likely. This forecast is actionable intelligence and assumes SPY will attempt another breakout if economic data remains favorable. Should PPI data disappoint or spark inflation fears, sentiment could quickly turn. Traders should remain flexible, trading around key levels and watching for failed breakouts or breakdowns to initiate positions.
Trading Strategy
With SPY trending higher and volatility low, long setups remain preferred on dips toward support at $642 or $640, with upside targets at $645, $648, and $650. If SPY clears $645 early in the session, traders can look for momentum to carry it toward $648, though profit-taking may emerge near these highs. Short trades remain viable on failed breakouts above $645 or confirmed breaks below $640, with downside targets at $638 and $636. Risk management remains key, especially with VIX closing at 14.49, but with volatility risk creeping into the fall. Stops should be tightened as price nears key levels, and traders should stay nimble with position sizing as macro data hits the tape.
Model’s Projected Range
The model projects SPY’s maximum range for Thursday between $639 and $648.25, with the Call side dominating in a slightly expanding range, suggesting consolidation with pockets of trending action. Overnight, markets rallied, and shortly after the open, SPY hit new intraday highs before encountering resistance just before 10 a.m., pulling back toward the prior close. It then moved sideways for most of the session until a late-day surge pushed it to a new all-time closing high at $644.89. Volume was average for mid-summer, lending support to the move. With another record high, the market signals potential for further gains on Thursday, though PPI data looms. If no external catalyst emerges, bulls will seek to defend $642 overnight to set up another push higher; failure there could lead to a retracement toward $638 or lower. Since reclaiming $585, SPY has held a strong uptrend with consistent dip-buying, a pattern likely to persist unless leadership weakens or a macro shock occurs. That said, most “Mag” stocks were lower today, hinting at possible profit-taking ahead. Parabolic moves often reverse, and signs are emerging that a correction could begin in early September and last into mid-October. While not yet high-probability, the risk is building. A close above $640 leaves little resistance ahead, with key levels at $645, $648, and $650, above which upside could accelerate. Support lies at $642, $640, $638, and $636, with a break below $636 risking a quick drop to $630. The broader trend remains strong as long as SPY holds above $630, and dip-buying should remain dominant. Despite seasonal weakness from August to October, bears remain sidelined as bulls push SPY well above its April bullish channel. The VIX fell 1.63% to 14.49, reinforcing the bullish tone. We continue to recommend hedging long exposure in anticipation of rising volatility this fall. A VIX below 23 remains supportive of equities, while a breakout above 23 could spark the widely anticipated 5–10% pullback.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended the day in a Bullish Trending Market State, with SPY closing well above MSI resistance turned support. Extended targets printed overnight and into the open, but these quickly faded and stopped printing just before 10 am. The MSI has not rescaled since yesterday’s close which implied the bull trend was losing steam. As such SPY moved mostly sideways during the market session after rallying to new highs overnight. For tomorrow, absent an external catalyst, the MSI is implying a likely pull back to MSI support at $641.25 which will likely be bought with the bull trend continuing to support higher prices. But with PPI data looming in the premarket, this picture can change quickly, therefore look to the MSI to update this view once that data is released to the market. MSI support is currently $641.25 and lower at $639.62.
Key Levels and Market Movements:
On Tuesday we wrote, “the market is likely to continue doing what it has been doing, moving higher,” and added, “The anticipated range for tomorrow is quite narrow, suggesting a sideways day with more two-way price action.” We also noted, “We see the market moving higher overnight but likely pausing near $645, where a bout of profit taking may emerge.” With that context, and with the MSI in a Bullish Trending Market State and price opening above $645, we chose not to pursue longs, expecting profit taking at that level. A textbook failed breakout followed before 10 a.m., and with extended targets no longer printing, we entered short at $645.50, targeting T1 at $641. We recognized this was a stretch given the strength of the overnight trend. But it was the only actionable level available from the premarket report. We held the short for some time, and by 1 p.m., price had drifted just above the prior day’s close at $642.55. As a bottoming pattern formed, we took T1 off at $642.85 and aimed for T2 at $641, but it never came. SPY bounced, yet with our stop at breakeven, we held in case $642.85 was retested and failed. It was retested twice, but with a triple bottom forming, we opted to close the position and call it a day. One and done by 2 p.m. The market did reverse and rally into the close, but with little to lean on from the MSI or our levels, we stayed out. It was a solid win, driven by a clear plan, disciplined execution, and strong alignment between MSI’s directional cues, our broader market model, and key technical levels. The MSI continues to be a cornerstone of our consistent trading process.
Trading Strategy Based on MSI:
Thursday brings PPI, which could materially impact the market, and we strongly recommend trading what you see after the data is released. In the absence of this catalyst, a close above $640, paired with new highs, will likely continue to pressure market participants to buy, driving prices higher. The anticipated range for tomorrow is widening, yet remains relatively contained, suggesting a trending session with pockets of sideways, two-way action. We expect the market to drift lower overnight toward the $642 area, which is likely to attract buyers once again. Today’s pause near $646 should provide initial resistance on a retest, though this is not a rally to fade or fight. Bulls remain in control as long as SPY holds above $640. We continue to favor the prevailing long trend and will look to buy dips while price holds above that level. A break of $640 could trigger a move toward $630, with support expected along the way, especially near $635. Our model still favors the bulls following the close above $640, with further all-time highs in play. For bears to regain any real control, a clean break below $640 is needed first, followed by a breach of $635 to draw in more sellers. A failure at $635 could open the door to $625, while a confirmed break below $600 would significantly shift the outlook and raise the risk of a 9–10% correction. The MSI remains in a Bullish Trending Market State, but without a rescaling higher today or extended targets printing at the close, we expect SPY to retest the day’s lows before making another attempt toward $646. We favor long setups above $635 and will only consider shorts on a confirmed break below $635 or a push toward $647 on a failed breakout pattern. 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 $645 to $654 and higher strike Calls indicating the Dealers belief that prices may tread water on Thursday with little upside. Dealers are no longer selling near the money Puts. The ceiling for Thursday appears to be $648. To the downside, Dealers are buying $644 to $575 and lower strike Puts in a 3:1 ratio to the Calls they’re selling continuing to display little concern that prices could move much lower on Thursday. Dealer positioning is unchanged from slightly bearish/neutral to slightly bearish/neutral.
Looking Ahead to Friday:
Dealers are selling SPY $645 to $665 and higher strike Calls indicating the Dealers belief that prices may be topping out at current levels. Dealers are no longer selling near the money Puts. The ceiling for the week appears to be $650. To the downside, Dealers are buying $644 to $575 and lower strike Puts in a 5:1 ratio to the Calls they’re selling, reflecting a bearish outlook for the week. 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
With SPY closing at a new record high and volatility still subdued, long setups remain favored above support at $640. Traders should target $645 and $648, tightening stops near each level. Shorts may be considered only on failed breakouts above $646 or a confirmed drop below $640, with targets at $638 and $636. With VIX at 14.49, conditions remain favorable for bulls, but sudden reversals are possible as we approach more economic data. Use tight stops, scale in gradually, and size positions conservatively until volatility picks up. Be ready to shift direction quickly if PPI surprises. Review the premarket analysis before 9 AM ET for updated levels and positioning.
Good luck and good trading!
