Market Insights: Friday, August 21st, 2026
Market Overview
US stocks bounced back on Friday, with the Dow gaining about 1% and both the S&P 500 and Nasdaq adding 0.4%, though all three major indexes still finished the week in the red after a rough bond-market sell-off pressured riskier assets throughout the week. Bitcoin stole the show, surging to $77,000 and logging its best week in two years, a striking contrast to the broader risk-off mood that dominated most of the week.
The bond market remained a key concern — Treasury Secretary Bessent's expanded buyback plan offered only brief relief before the 10-year and 30-year yields snapped back to their prior elevated levels, with markets treating the move as a limited patch rather than a real solution. Eyes are now on Bessent's Monday press conference, where he'll lay out the details of the US plan to economically isolate Iran, a move that has China in its crosshairs given its reliance on Gulf oil. Investors are also getting ready for a heavy week ahead, with the Fed's Jackson Hole Symposium and Nvidia's second quarter earnings both on deck. On the earnings front, BJ's Wholesale Club delivered solid quarterly results, showing that value-focused shoppers are still showing up when the price is right.
SPY Performance
SPY opened at $766.05 and managed to hold its ground through most of the session, never threatening a sharp breakdown and staying within a relatively contained range. The high of $767.85 came with modest upside attempts that didn't generate a ton of follow-through, but crucially, the bulls kept things from falling apart. The low of $764.17 held firm, and price recovered to close at $765.62 — sitting comfortably in the middle-to-upper portion of the day's range. That's a $3.68 spread from low to high, a noticeably tighter range than the prior session, suggesting the aggressive selling pressure took a breather.
SPY finished up 0.40% on the day, a modest but meaningful bounce after the prior session's ugly close near the lows. Volume came in at 36.33 million shares, below average, which tempers the enthusiasm a bit — buyers showed up, but not in force. That's the kind of low-volume recovery that's encouraging on the surface but still needs confirmation. What gives bulls a better reason to smile is the VIX dropping 5.62% to close at 15.11, unwinding a chunk of the fear that had built up. When price ticks higher and volatility retreats meaningfully, that's at least a short-term signal that the sellers are stepping back. SPY still needs to reclaim its upper range and attract heavier buying volume before the bulls can make a convincing case that the recent pressure has truly reversed.
Major Indices Performance
The Dow led the major indices today, climbing 0.98% in a session that saw broad participation from blue-chip names. That kind of strength from the Dow is a positive signal — when the large, established names are leading the charge, it suggests the buying has real conviction behind it rather than just speculative momentum chasing. Investors appeared comfortable rotating into quality, and the Dow rewarded that positioning with the best gain among the major benchmarks.
The Russell 2000 wasn't far behind, posting a solid 0.93% gain. Small-caps picking up that kind of ground is an encouraging sign for risk appetite across the market. These names are highly sensitive to interest rate expectations and credit conditions, so seeing them participate meaningfully in today's rally suggests investors aren't completely spooked by the current yield environment. After the beating small-caps absorbed in recent sessions, today's bounce offered some relief to bulls who have been waiting for a reason to step back in.
The Nasdaq edged up 0.43%, a respectable showing that rounds out a green day across the board. The S&P 500 also finished in positive territory, consistent with the broadly constructive tone. The fact that all the major indices closed higher — with the Dow and Russell 2000 leading the way — points to a session where buying pressure was genuine and fairly widespread rather than concentrated in one corner of the market. Not a blowout day by any stretch, but a clean, across-the-board advance is exactly the kind of follow-through the bulls needed to see.
Notable Stock Movements
Tesla took the spotlight today as the clear standout in the Magnificent Seven, surging as much as 5.14% to lead what was a largely constructive session for the group. That's a significant move for a name of Tesla's volatility and market weight, and when the cohort's biggest mover is pushing aggressively to the upside rather than dragging the tape lower, it creates an entirely different kind of energy across growth-oriented portfolios. Tesla leading the charge sends a message that risk appetite is returning, at least selectively, and that investors are willing to step back into some of the higher-beta names they've been more cautious about in recent sessions.
The Magnificent Seven as a group had a mostly green day across the board, which stands in welcome contrast to the broad red showing from the prior session. The exceptions were Amazon, Apple, and NVIDIA, with NVIDIA pacing the laggards down as much as -0.98%. That's worth noting — NVIDIA showing relative weakness even on a broadly positive day for the cohort is something to keep an eye on, given how much of the group's collective narrative has been tied to AI infrastructure spending and chip demand. Still, one soft name doesn't spoil what was otherwise a healthy day for the group.
What today's performance signals for broader market sentiment is encouraging, even if it's too early to call it a trend reversal. These are the stocks institutional money gravitates toward when confidence is building, and a mostly green showing across the cohort aligns cleanly with the broad-based gains seen across the major indices today. The question now is whether this group can string together consecutive days of coordinated upside — because until they can do that consistently, every green day carries an asterisk.
Commodity and Cryptocurrency Updates
Crude oil slipped 1.31% on the session but still settled at $86.68, keeping energy prices well entrenched in territory that gives policymakers very little comfort. The modest pullback doesn't change the bigger picture — black gold has rallied well above recent expectations and shows no signs of a sustained retreat. Supply remains tight, global demand continues to hold up, and with crude camped out in the upper $80s, the inflationary math stays complicated. A sustained move above $70 was always the threshold that could make the Fed's job harder, and at current levels, energy is still very much part of that conversation.
Gold had an outstanding session, surging 3.58% to close at $4,678. The metal is in full momentum mode and today's move only adds to what has been a remarkable run. Central bank demand, macro uncertainty, and persistent inflation concerns remain the structural pillars driving this rally, and buyers continue to step in aggressively rather than wait for dips. The bull case for gold looks as strong as ever.
Bitcoin delivered another impressive performance, climbing 5.56% to close just below $77,091. That's a meaningful push higher that keeps bulls firmly in control and builds on the strong momentum already in place. Buyers continue showing real conviction, stepping into strength rather than fading it, and the overall tone across the crypto market remains decidedly positive. Bitcoin is leading the charge, and there's nothing in today's session to suggest that changes anytime soon.
Treasury Yield Information
The 10-year Treasury yield continued its climb today, rising another 0.89% to close at 4.740%. That's two consecutive sessions of upward pressure now, and the modest relief that had been building earlier in the week is effectively gone. Yields are grinding higher, and the market is being reminded that this environment doesn't offer much room for complacency.
At 4.740%, the yield is sitting 24 basis points above the 4.5% threshold where equities start feeling real strain — and today's broad market managed to push through despite that headwind, which is worth noting. But the more important number to focus on is 4.8%, because that's only 6 basis points away now. That is an uncomfortably thin margin. One hot inflation print, one hawkish Fed speaker, or one weak Treasury auction could push the yield through that level before the week is out. At 4.8%, this framework calls for accelerating selling and more serious market damage — and right now, the cushion standing between here and there is razor thin.
The 5% level, where things get genuinely painful for equities, sits 26 basis points out. The 5.2% correction territory remains further off. But with yields making back-to-back moves higher and the 4.8% line this close, those distant markers feel less theoretical than they did a week ago. The direction of travel is the wrong one, and consecutive sessions of yield pressure tend to build on themselves.
What to watch now is whether the yield can be contained below 4.8% or whether momentum carries it through. A reversal back toward 4.65% would give stocks room to breathe. But if 4.740% is a stepping stone rather than a ceiling, the pressure on equities will intensify quickly. The next few sessions are critical.
Previous Day’s Forecast Analysis
Friday's forecast called for SPY to trade within a projected range of $761 on the downside and $773 as the max upside target, with the bias leaning bearish given where Thursday's close landed within that twelve-point window. The VIX surging 7.52% to 16.01 was flagged as a warning sign for bulls, with the speed of that volatility jump suggesting institutional players were repositioning defensively rather than buying dips with conviction. The model characterized the setup as trending rather than choppy, meaning participants should expect purposeful directional movement — not sideways drift.
The $769 level was identified as the defining line in the sand, serving as the gate above the tape that bulls had to reclaim to start any real repair. A clean push through $769 would open the door to $770, then $771, then $772 — with $773 standing as max upside and the heaviest overhead resistance on the board. On the downside, $766 was the first level to respect, sitting just beneath Thursday's close and representing an early warning sign if sellers broke through quickly. Below $766, $765 was flagged as the most critical battleground where the heaviest support fight was expected, with a clean break there potentially accelerating losses toward $764 and ultimately $761 as the floor at the bottom of the expected move.
The recommended trading strategy called for trimming position sizing to the 60-70% range and tightening stop-losses to the 0.75-1.0% band from entry. On the long side, the preferred entry was a confirmed bounce off $762-763 support, targeting $765 initially and $768.15 as the stretch goal, with stops below $761. On the short side, a sustained break below $762.05 with renewed selling pressure was the trigger, targeting $758-759 primarily and $755 as a secondary target, with stops above $765. The strategy emphasized patience — no chasing early morning gaps, and waiting for the market to show its hand before committing size.
Market Performance vs. Forecast
Friday's session opened at $766.05, landing almost precisely at the forecast's first critical battleground and immediately framing the day's question — could bulls reclaim $769 and begin repairing the week's damage, or would sellers push through $766 and hand the tape to the bears? The answer fell somewhere in between, as SPY chopped within a relatively tight range without delivering a decisive move in either direction. The projected range had identified $761 on the downside and $773 on the upside, and Friday's actual range of $764.17 to $767.85 sat comfortably inside that window — the framework contained the full session without getting stretched.
What the model got right was the structural setup. The forecast had flagged $766 as the first level sellers needed to crack to accelerate the downside, and Friday's low of $764.17 dipped briefly below that marker before buyers stepped in and defended the zone. That defense held, and the session closed at $765.62 — right in the middle of the support cluster the forecast had identified as the most contested ground on the board. The rising market scenario had outlined $765 as the first reclaim target for bulls following any confirmed bounce off support, and that's almost exactly where price settled. Traders who followed the recommended 60-70% position sizing and tightened stops to the 0.75-1.0% band from entry were well-positioned for a session that didn't deliver a clean trending move. Risk management protocols protected capital by keeping exposure appropriate for an elevated-VIX environment that ultimately resolved with the VIX dropping 5.62% to 15.11, easing some of the fear that had built through Thursday's close. The model's caution against chasing early gap-ups proved smart — Friday's open near $766 invited patience, and patience was rewarded. The framework continues to map the battlefield accurately, and sessions like Friday reinforce why respecting the full projected range rather than anchoring to one directional bias is what separates disciplined traders from reactive ones.
Premarket Analysis Summary
The premarket analysis posted at market open identified SPY spot at $765.94 in a call-dominated tape, marking the first real shift in tone after four straight sessions of selling pressure. The expected move had widened to seven points, signaling participants were bracing for larger swings than seen all week. The defining level of the day was $767 — flagged as the gate sitting just above spot and the line separating another leg lower from a genuine repair attempt. Upside targets were set at $768, $770, $772, and $773, with $768 expected to come quickly on a reclaim of $767, $770 identified as the heaviest concentration overhead where price would want to stall, $772 as the level bulls really needed for a clean floor heading into next week, and $773 standing as the max upside cap on the expected move. On the downside, $765 was the first level to watch sitting right beneath spot and flagged as the site of the heaviest battle of the day, $764 was identified as the immediate floor holding the week's structure together, $762 was the point of last hope where buyers should step in, and $759 stood as max downside at the bottom of the expected move. The analysis noted that with spot pinned between $765 and $767, the first clean break would decide the day.
The actual session leaned bullish but stayed contained. SPY opened at $766.05, immediately above the $765 first support level and just inside the defining zone, before pushing up to tag $767.85 on the high — briefly touching the $767 defining level but never mounting a clean reclaim of it. The upside targets at $768 and beyond remained untouched, and the tape never developed the momentum needed to confirm the call-dominated shift in tone. On the downside, price dipped to $764.17, cracking through the $765 first level and briefly threatening the $764 immediate floor before buyers stepped in and defended it. The close at $765.62 for a gain of 0.40% settled price right back in the middle of the morning's key zone, confirming neither side won the day decisively. The VIX dropping 5.62% to 15.11 aligned with the call-dominated bias from the premarket, though the muted price action suggested conviction was thin on both sides — a Friday grind that cut right down the middle exactly as the analysis warned was possible.
Validation of the Analysis
Friday's session validated the premarket framework with surgical precision, with SPY opening at $766.05 and immediately confirming the central thesis heading into the day — that spot was pinned right between 765 and 767, and the first clean break would decide the session. The open landed squarely inside that contested zone, and the tape spent the morning probing both sides before ultimately resolving to the upside. The analysis identified 767 as the defining line separating another leg lower from genuine repair, and that level acted as a ceiling for most of the session — the high of $767.85 pushed through it briefly before sellers capped the move, exactly the kind of stall behavior the premarket warned about at that level. The low of $764.17 tested right into the 764 zone flagged as the immediate floor and the level holding the week's structure together, and buyers defended it precisely — a textbook response to a key support level that was clearly mapped before the open.
The upside analysis was equally valuable. The premarket noted 768 would come quickly on a reclaim of 767, and the high of $767.85 validated that sequence — buyers pushed toward 768 but couldn't secure it cleanly, which is consistent with the analysis framing that level as meaningful resistance. The close at $765.62 settled right in the middle of the expected range, containing the entire session within the framework that was telegraphed heading in. The VIX dropping 5.62% to 15.11 reinforced the call-dominated tape description from the premarket, confirming the shift in tone that was identified before a single share traded. Traders who used 765 as their pivot, faded weakness into 764, and respected 767 to 768 as resistance overhead had a fully structured session with defined entries and clean risk levels at every turn.
Looking Ahead
Monday's economic calendar is quiet, with no high-impact releases scheduled to shake things up. That actually gives traders a useful window heading into what shapes up to be a low-key start to the week. Without any macro data to drive the narrative, Monday becomes a positioning session — the kind of day where the market tells you more about sentiment and conviction than any report could.
With the next major catalyst being Wednesday's FOMC Meeting Minutes, Monday's price action is really about how traders want to set themselves up ahead of that release. Watch for any early directional bias coming out of Friday's close and whether buyers or sellers are willing to commit size without a data catalyst behind them. A quiet Monday can either be a calm drift or a coiled spring — the Minutes will ultimately decide which way the spring unloads.
Market Sentiment and Key Levels
The directional bias today leans cautiously bullish, though the conviction behind the move leaves something to be desired. SPY gained 0.40% and closed at $765.62, but the session came on below-average volume of 36.33M shares, which means the bulls are advancing without a full head of steam behind them. Low-volume rallies can reverse quickly, and that's worth keeping in mind as we head into the next session. The VIX dropping 5.62% to 15.11 is a constructive sign — fear is coming out of the market, and that generally creates a friendlier environment for equities. Breadth was solid too, with the Dow and Russell 2000 both outperforming SPY, suggesting the rally had some width to it even if mega-cap tech was mixed on the day.
Key resistance sits at $767.85, today's intraday high. A clean break above that level on volume would be a meaningful signal that bulls are ready to press higher, and momentum could accelerate from there. On the downside, $764.17 — today's intraday low — is the immediate support line to defend. If SPY slips below that on expanding volume, the modest gains from today could unwind fast, and the $762 area would come back into focus. Gold surging 3.58% to $4,678 and Bitcoin climbing 5.56% to close just below $77,091 are injecting some genuine risk-on energy into the market, which could carry into equities if the momentum holds. Crude oil pulling back 1.31% to $86.68 is a mild tailwind, easing some of the inflationary pressure that elevated yields have been amplifying. For now, bulls have a slight edge, but they need volume to confirm before this move earns real respect.
Expected Price Action
Monday's session brings actionable intelligence generated by our AI model, with SPY projected to trade within a range defined by $759 on the downside and $773 as the max upside target. That fourteen-point window puts this firmly in trending territory, meaning participants should expect directional conviction rather than choppy sideways action — price has room to run in either direction and likely will. With Friday's close sitting in the middle portion of the projected range and the VIX dropping 5.62% to 15.11, fear is receding and bulls carry a modest structural edge heading into Monday's open.
The $767 level is the defining line that separates continued repair from another leg lower. Reclaim and hold $767 cleanly and $768 comes quickly, with $770 standing as the heaviest overhead concentration and where price should want to stall. Above that, $772 is the level bulls truly need — a clean hold there would put a legitimate floor under the market heading deeper into next week. Beyond that, $773 caps the expected move top as max upside and the heaviest resistance on the board. On the downside, $765 is the first level to respect and sits right beneath Friday's close, meaning a clean break there could get ugly in a hurry. Lose $765 and $764 becomes the immediate floor and the level holding this week's structure together. Under $764, $762 is the point of last hope where buyers need to show up, and failure there opens the door to $759 at the bottom of the expected move. Bias leans modestly bullish given Friday's close above the midpoint and the call-dominated tape, but spot is pinned right between $765 and $767 — the first clean break out of that zone decides the direction of Monday's session.
Trading Strategy
The VIX dropping 5.62% to 15.11 is a green light for bulls and a headache for anyone sitting in short positions. Fear is getting wrung out of the market, and that directional move lower in volatility — paired with broad-based gains across every major index — tells you the hedging pressure from recent sessions is unwinding. At 15.11, the VIX is settling into a comfortable, low-anxiety range that historically supports controlled, upward price discovery. When volatility compresses at this pace on below-average volume, it suggests the market is drifting higher without urgency, which can be a double-edged sword — less fear, but also less firepower. Keep position sizing in the 70-80% range to stay engaged without overcommitting into a low-volume tape, and maintain stop-losses in the 0.75-1.0% band from entry. This is not a session to load the boat — let volume confirm the move before adding meaningful size.
In a rising market scenario, bulls want to see price hold above $765 and push cleanly through $767.85 resistance on improving volume. A successful retest of the $765-766 area on any intraday pullback is the preferred long entry, with the initial profit target at $767.85 and the stretch goal at $770 if momentum builds through the prior session high. Stops on longs belong below $763 to protect against a failed breakout without absorbing unnecessary damage. With the VIX as calm as 15.11, don't be surprised if the market grinds rather than rips — patience is the discipline here, and adding to longs only on confirmed volume expansion is the right approach.
In a falling market scenario, the key level to defend is $764.17, the session low. A clean break below that floor on renewed selling pressure opens the door to a short entry targeting the $761-762 zone as the primary profit destination, with $758 as the secondary target if sellers find conviction. Stops on shorts belong above $767 to keep the risk-reward ratio honest. If the market opens flat and quickly fades back through $764 without a recovery bid, that's the signal to initiate shorts with measured size. Cover into support levels rather than pressing the move lower, and don't let the calm VIX reading at 15.11 breed overconfidence — conditions can shift quickly when volume picks back up.
Model’s Projected Range
SPY's projected maximum range for Monday is $762 to $772, with the Put side dominating in an expanding band that suggests trending price action with intermittent chop. Monday brings no economic news due out so the market will trade on technicals. SPY closed at $765.62, up 0.40%, after a relatively tight session that saw a high of $767.85 and a low of $764.17 off an open of $766.05, with trading volume coming in below average — a measured session that didn't commit hard in either direction. SPY is trading near our model's first support at $765, and with no major macro catalyst on the immediate horizon, the tape is likely to lean on technicals to set the tone. On the upside, if $770 gives way, the next target in our model is $772, while a break below $765 opens the door toward $762 — and if that level fails, there is little to keep price from falling toward $760. The long-term bull trend remains intact above $640 with SPY well above structural support. As long as price holds above key structural levels, this remains a broader dip-buying environment. Absent a catalyst, resistance sits at $770, $772, $774, $775, while support rests at $765, $762, $760, $755. Given that SPY closed just above the first support level, we favor buying dips at $765 on any early weakness Monday. Bitcoin surged 5.56% to close below $77,091, while MAG stocks posted a mostly green day led by Tesla up 5.14%, with NVIDIA the lone laggard down 0.98% — that kind of broad leadership strength across crypto and mega-cap tech supports the case for further upside if technicals cooperate. The VIX closed at 15.11, down 5.62%, suggesting a significant reduction in fear as the market continues to shake off recent volatility and reposition toward risk. SPY closed near the lower line of its trend channel, keeping structural support in play around the $765 area and signaling the bulls will need to reclaim some ground early in Monday's session to maintain upside momentum.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended in a Bearish Trending Market State with SPY closing at $765.62. SPY closed above MSI resistance, which means that $765.42 level now flips to support heading into Monday, with $763.24 serving as the next layer of support below. Extended targets were printing at the close and were visible during the AM session, PM session, and into the close, confirming that the bulls had enough juice to keep the upside pressure alive throughout the regular session. No extended targets were visible in premarket, so the bullish momentum developed during the session itself rather than carrying over from overnight activity. The session was notable for how little it actually moved despite it being an OPEX Friday. The MSI did not rescale overnight and remained in a bearish configuration, with prices bouncing off MSI resistance early and generating similar choppy action for much of the day. The MSI did rescale around midday into a Ranging state, but price remained contained in a fairly narrow range all session, reflecting a market that simply was not interested in committing to a direction. The moderate $2.18 spread at the close indicates the market has some room to move but is not expressing the kind of wide conviction you would expect from a session with real directional urgency. The MSI is forecasting a session that is likely sideways to possibly up testing higher levels. That said, the bears are likely to maintain pressure to the downside. Any failure of MSI support is likely to see SPY retest the day's lows. MSI support is $763.24 with resistance at $765.42.
Key Levels and Market Movements:
Thursday we stated, "The most actionable setup in a moderate Bearish Trending MSI without extended targets at the close is to sell rallies to $763.24 if the Bearish Trending state persists and extended targets are not printing above, targeting premarket levels below as the primary downside reference since SPY has now closed beneath the MSI range," and added, "Bulls want to see overnight price hold current levels and the MSI rescale into a Bullish Trending state, opening the door to reclaiming $763.24 and targeting $765.42 above," while also noting, "Do not anticipate the direction — let the MSI confirm its state before committing to either side." That framework captured the setup precisely, and while the session was not a clean trending day, traders who followed the process found their footing quickly.
The MSI did not rescale overnight and opened Friday still in a Bearish Trending state, which kept the initial bias toward selling any pop toward resistance. SPY opened at $766.05, which placed it right near the upper boundary of interest, and early attempts to push higher were met with resistance as prices pulled back and bounced around without much conviction. The MSI rescaled into a Ranging state around midday and the session proceeded to grind sideways in a narrow band, keeping the overall price action contained and making it difficult to generate multiple high-conviction setups. Despite the OPEX backdrop, volume came in at 36.33 million shares, well below average, and the low-volume summer environment simply did not provide the fuel for a wider move. Extended targets did print above during the AM session, PM session, and into the close, which gave bulls a reference point for the upside and ultimately helped SPY close with a modest gain of 0.40%. SPY opened at $766.05, traded a high of $767.85, a low of $764.17, and closed at $765.62. The VIX dropped 5.62% to 15.11, reflecting a modest easing of anxiety even as the MSI maintained its bearish configuration through most of the session. The primary trade setup for traders following the framework was one solid opportunity off the early session, with the extended targets printing above providing confirmation that any dip toward MSI support was a potential entry. At minimum it was a 1-for-1 session for traders following the framework. It was an easy day to read albeit not an easy day to trade given the tight choppy range. But substantial setups were present, all identified through proper context, patience, and flexibility while leveraging the MSI, premarket levels, and market structure rather than forcing trades. The MSI continues to prove its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Monday has light economic news so the market is likely to move more sideways than trend given the Bearish Trending at the close, though with SPY having closed above MSI resistance, that $765.42 level now serves as support heading into the new week and bulls have a slight structural advantage if they can hold that ground overnight. The MSI is closing in a moderate Bearish Trending state with a $2.18 spread, and while the state itself remains bearish, the close above former resistance introduces some nuance heading into Monday. The absence of high-impact economic catalysts means the market is largely on its own to find a direction, and without a meaningful external push, price is more likely to chop than trend with authority.
Given the close above $765.42, bulls want to see overnight price hold above that level and the MSI rescale into a Bullish Trending state, which would open the door to testing higher levels and potentially printing extended targets above once again. If the MSI rescales higher overnight and $765.42 holds as support, buying dips toward that level and targeting levels above becomes the preferred approach and the more actionable setup for Monday. Bears, on the other hand, want to see $765.42 fail to hold overnight and SPY press back below that level, at which point $763.24 becomes the next meaningful reference below. Any failure of MSI support at $763.24 is likely to see SPY retest the day's lows and potentially press toward lower levels beneath the session range.
The most actionable setup in a moderate Bearish Trending MSI with extended targets printing above at the close is to buy dips toward $765.42 on Monday as long as that level holds as support and the MSI confirms a shift into a Bullish Trending state, targeting higher levels as the primary upside reference. If instead the MSI remains in a Bearish Trending state at the open and $765.42 fails to hold, selling any rally back toward that level and targeting $763.24 below becomes the preferred trade. A Ranging state at Monday's open is also a real possibility given how the session finished, and in that environment failed breakouts above $765.42 and failed breakdowns below $763.24 offer the highest-probability setups. The bears are likely to maintain pressure to the downside, and any meaningful recovery attempt needs to be confirmed by the MSI before trusting it.
The long-term bull trend remains intact above $640 and failed breakouts and failed breakdowns continue to offer the highest-probability setups. Remain flexible, avoid trading during Ranging Market States unless a clear failed breakout or breakdown presents itself, and ensure all trades are fully aligned with MSI signals. 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
Dealers are selling SPY $773 to $786 and higher strike Calls while buying $766 to $772 Calls, indicating the Dealers' desire to participate in any rally on Monday. The ceiling for Monday appears to be $769, making it unlikely prices move significantly higher than today's close absent an external catalyst. Notably, Dealers are also selling $756 to $765 Puts, and Dealers do not sell ATM Puts unless they believe there is a floor in the market at $756, supporting the case for higher prices. To the downside, Dealers are buying $762 to $705 and lower strike Puts in a 4:1 ratio to the Calls they're selling, displaying heightened concern that prices could move lower. Below $766 is bearish and above $772 is bullish with everything in between expected to be choppy and trap filled. Should SPY fail to hold $765, support has thinned and lower prices are likely. Above $772 there is building resistance which will slow any gains. Dealer positioning is unchanged at bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $773 to $795 and higher strike Calls while buying $766 to $772 Calls, indicating the Dealers' desire to participate in any rally next week. The ceiling for next week appears to be $774. Dealers are not selling any ATM Puts, telling us they have no defined floor heading into the end of next week. To the downside, Dealers are buying $765 to $725 and lower strike Puts in a 4:1 ratio to the Calls they're selling, displaying heightened concern that prices could move lower should support give way. Notably, Dealers have not added to their hedges, implying they continue to believe dips are buying opportunities. Remain bullish above $767, but below $766 the posture shifts bearish with chop in between. For the week Dealer positioning is unchanged at 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 $765.62 and VIX cooling 5.62% to 15.11, the tape leans bullish. Favor longs above $765.62, targeting $767.85, with stops below $764.17. A break under $764 flips the bias short.
Keep position sizing in check given below-average volume. Review the premarket analysis posted before 9 AM ET for any changes in the model's outlook and Dealer Positioning.
Good luck and good trading!
