Market Insights: Friday, August 22nd, 2025
Market Overview
Stocks surged Friday as Fed Chair Jerome Powell’s highly anticipated Jackson Hole speech sparked a broad rally on Wall Street, fueling expectations for a September rate cut. The Dow rocketed more than 800 points, or 1.9%, to close at a new record high, while the S&P 500 added 1.5% and the Nasdaq climbed 1.9%. Markets had spent the week under pressure, with investors shifting away from tech and into defensive plays, but Powell’s remarks turned sentiment decisively bullish. Powell acknowledged inflation risks but also signaled that the Fed’s policy stance could shift due to a softening economic outlook, opening the door for rate cuts in the coming months.
Traders immediately responded by pricing in a 91.5% chance of a September cut, up sharply from 70% earlier that morning. Treasury yields tumbled as expectations for a more dovish Fed increased, and cryptocurrencies rallied alongside equities. President Trump also added fuel to the news cycle, threatening to fire Fed Governor Lisa Cook if she doesn’t resign, continuing his push to pressure the central bank into easing policy. On the earnings front, Zoom and Ross Stores both jumped on strong results, while Workday and Intuit slid. Intel popped 5% after Trump said the U.S. government will take a 10% stake in the company. With Powell’s tone favoring accommodation, traders viewed Friday as a turning point, pushing equities back into rally mode.
SPY Performance
SPY surged 1.54% to close at $645.31 after breaking through multiple resistance levels during a powerful session that saw strong buying from the open. The ETF opened at $637.76, dipped briefly to a low of $637.26, and then ripped higher after Powell’s dovish tone was confirmed, topping out at an all-time high of $646.50. Volume jumped to 79.56 million shares, slightly above average, confirming the strength behind the move. With the VIX plunging and sentiment sharply reversing, Friday marked a defining shift in momentum after a cautious, rangebound week.
Major Indices Performance
The Russell 2000 led the charge Friday, surging 3.91% as small-cap stocks rallied hard on renewed optimism around rate cuts. The Dow followed with a 1.89% gain, notching a fresh all-time high on broad participation and heavy buying in industrials. The Nasdaq rose 1.88%, reclaiming leadership thanks to strength in mega-cap tech. The S&P 500 tacked on 1.5%, breaking a five-day losing streak and signaling a potential sentiment shift. The dovish surprise from Powell flipped the tone across all major indices, erasing earlier concerns around jobless claims and weak earnings. Every major benchmark closed the week on a high note, with cyclicals and growth names leading.
Notable Stock Movements
It was a nearly perfect day for the Magnificent Seven, with all members closing green except Netflix, which dipped 0.11%. Tesla stood out with a 6% gain, followed by strong rallies in Google and Amazon, both up over 3%. The group bounced back convincingly after a tough week, reflecting renewed investor confidence in high-growth tech following Powell’s remarks. While Netflix lagged, it was largely viewed as a rotation issue rather than a sign of weakness. If momentum in these names continues, the broader market is likely to ride their coattails higher.
Commodity and Cryptocurrency Updates
Crude oil added 0.39% to settle at $63.77, extending its recent grind higher. The model continues to forecast a move toward $60 before year-end, though strength in equities has helped stabilize prices in the short term. Gold rallied 1.06% to $3,417, responding positively to the dovish shift from the Fed. Bitcoin soared 4.01%, closing above $116,990, with Ethereum and other cryptos also jumping. The combination of lower yields, reduced rate fears, and increased risk appetite helped drive assets higher across the board.
Treasury Yield Information
The 10-year Treasury yield dropped 1.80% to close at 4.253%, reflecting a sharp reversal in rate expectations. After flirting with danger levels earlier in the week, yields retreated firmly in response to Powell’s dovish tone. While yields remain elevated compared to earlier this year, the drop eases pressure on equities and reduces the likelihood of a near-term correction. Still, traders will keep a close eye on the 4.5% threshold, which remains a red-alert level for the broader market if revisited.
Previous Day’s Forecast Analysis
Thursday’s forecast called for a wide trading range between $625.50 and $644, with a bearish bias unless SPY could reclaim $641. The model emphasized the importance of holding $633 and flagged that a failure there could lead to $630 or even $625. Resistance was pegged at $636, $641, $643, and $645, with support at $633, $630, and $625. The model leaned short below $641, favoring quick profits and avoiding overnight risk given Friday’s event-driven setup. With volatility climbing, traders were advised to prepare for directional price action and watch closely for breakouts or breakdowns around key levels.
Market Performance vs. Forecast
SPY opened at $637.76 and quickly broke through key resistance, blasting past the bias level of $641 and extending all the way to $646.50 before settling at $645.31. The actual range landed just outside the upper boundary of the model’s projected high at $644, but the price action followed the overall forecast direction if bulls reclaimed key levels. Once SPY broke $641, the model correctly identified that the move could extend to $645 and beyond. This played out in textbook fashion, giving long traders a strong opportunity to capitalize on the upside breakout. The call for a wide range and trending action proved spot on, and the forecast once again provided reliable trading levels for execution.
Premarket Analysis Summary
In today’s premarket analysis posted at 7:10 AM, SPY was trading at $637.41 with the bias level set at $638.50. The analysis leaned bearish under that level but noted the potential for a breakout should SPY reclaim it. Targets above included $639.10 and $641.60, while downside levels were $636, $635.10, and $633.60. The model highlighted the potential for Powell’s Jackson Hole comments to shift market direction and noted that reflexive rallies were weakening unless supported by meaningful sentiment shifts. Caution was urged ahead of the announcement, with traders advised to watch for rejections near resistance or breakdowns below $637.
Validation of the Analysis
Friday’s action validated the premarket analysis perfectly. SPY opened just under the bias level at $637.76 and quickly reclaimed $638.50, setting off a rally that surpassed all upside targets. The break above $639.10 and later $641.60 confirmed the premarket roadmap, and the strength of the move highlighted the significance of the bias level. Traders who used the premarket targets to guide their entries had clear setups, with the rally delivering outsized returns on long trades. The premarket levels once again proved to be highly actionable, underscoring the consistency and precision of the daily model.
Looking Ahead
Next week starts off quiet on the economic front, with no major releases on Monday through Wednesday. The focus shifts to Thursday’s GDP and unemployment claims, followed by Friday’s key PCE inflation data. After Friday’s dovish pivot, the market may coast on momentum early in the week, but economic data will need to support the Fed’s evolving stance to sustain higher prices. Traders should prepare for another burst of volatility late in the week as fresh data challenges the Fed’s new direction.
Market Sentiment and Key Levels
SPY closed at $645.31, breaking above prior resistance and firmly positioning bulls back in control. The market sentiment has turned decisively bullish, helped by the Fed’s unexpected tilt toward easing. Support for Monday is now at $643, $641, $638, and $636. Resistance sits at $647, $650, $652, and $655. A move above $647 would keep the rally alive with potential to test $650 and beyond, while a drop below $641 could signal early profit-taking and possibly a retrace to $638. The VIX falling below 15 reinforces the bullish outlook, but traders should still monitor key levels for signs of exhaustion.
Expected Price Action
Our AI model projects SPY to trade between $641 and $650.75 on Monday, with a bullish bias. The range has narrowed significantly, suggesting choppy price action with intermittent trending periods. If SPY holds above $643, the bulls may push for $647 or even $650. However, a rejection at those levels could lead to consolidation or a minor pullback. On the downside, a break below $641 could trigger a move toward $638 or $636, but barring any surprise news, the trend favors higher prices. This forecast is actionable intelligence, and traders should monitor how SPY interacts with resistance at $647 and support at $641. A successful breakout above $650 could open the door to $655 later in the week.
Trading Strategy
With the VIX down 14.28% to 14.23, the market has entered a low-volatility regime that favors long setups. Long trades are preferred on dips into $643 or breakouts above $647, targeting $650, $652, and possibly $655. Short setups should only be considered if SPY breaks below $641 and fails to recover, with targets at $638 and $636. In a low-VIX environment, wide moves may be less frequent, so tighter stops are appropriate, and profits should be booked more aggressively. Traders should keep position sizes moderate given the possibility of sudden reversals after such a strong rally. Always monitor how SPY reacts near key resistance and support for failed move setups, which remain some of the most reliable trade entries.
Model’s Projected Range
The model projects SPY’s maximum range for Monday between $641 and $650.75, with the Call side dominating in a narrowing band that suggests choppy price action on Monday with intermittent trending periods. The range has tightened significantly a monster rally as a result of Fed Chair Powell’s comments at Jackson Hole favoring rate cuts in September. After drifting slightly higher overnight, SPY opened just below $638 at a prior major resistance level. This level did not hold long as the market anticipated a more dovish speech and pushed SPY higher. When the news hit the wire, prices shot straight up and continued virtually the entire session with SPY reaching a new all-time high of $646.50. A massive 1.51% gain reaffirmed bull control and crushed any bear hopes with a record close at $645.31. Volume was high which confirmed the bullish undertone. With little economic news scheduled early next week, prices are expected to continue higher but with a much slower ascent. The market will likely take time to digest today’s gains before moving materially higher. We stated earlier that SPY needs to reach $660 to confirm the recent breakout, otherwise probabilities favor a failure at this level with a retracement in September. For early next week, more two-way trading is expected with a bias toward the long side. Overnight the bulls will attempt to defend $643 to set up additional new highs on Monday. A failure at $643 is likely to retrace a part of today’s rally, opening the door to $641. But to bring the bears back into play, SPY will need a close below $638. Should a selloff ensue, which remains a low-probability event on Monday, below $631 there is little to hold up the market. Resistance on Monday is expected at $647, $650, $652, and $655, above which supply will likely cap further gains. Support rests at $643, $641, $638, and $636. Since reclaiming $585, SPY has remained in a persistent uptrend with dip buyers stepping in virtually every time. Mega-cap stocks reclaimed their leadership role today with all but Netflix rallying, led by Tesla, Google and Amazon, up more than 6% and 3% respectively. As long as these mega tech firms move higher, the market will follow. While the recent parabolic advance remains high risk and low reward, this simply favors quick profit-taking and avoiding overnight holds. Long setups are still favored over shorts until major support below is lost. The odds of a correction between September and mid-October have dropped dramatically, and the long-awaited retrace may not materialize this year. Fed easing cycles are typically met with higher stock prices since weaker companies, such as those in the Russell 2000, lower borrowing costs and improve profitability. While many pundits are still calling for a correction, it is better to stay with the trend until it is clear that it is no longer your friend. The VIX fell 14.28% to 14.23, which favors higher prices as volatility below 23 remains broadly supportive of equities, while a breakout above that level could spark the widely anticipated 5–10% pullback. SPY closed well above the bull trend channel from the April lows, with only a two-day dip outside of this channel. As a result, our model redrew the bull channel to lessen the slope, while remaining solidly bullish.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended the day in a Bullish Trending Market State, with SPY closing mid-range, below MSI resistance. During the regular session the MSI rescaled higher several times in rapid succession with extended targets above. At the close there were no extended targets printing. But certainly, the herd participated in the days move to a new all-time high and new high close, as the MSI led the way even before the Chair Powell’s speech. In its current state, the MSI is forecasting higher prices on Monday. MSI support is currently $643.12 with resistance at $646.18.
Key Levels and Market Movements:
On Thursday we wrote, “Friday brings Fed speak, which many expect will move the market decisively, so we recommend trading what you see,” and noted, “the bulls are likely to defend $633 again in an effort to push SPY toward $642 or even $645.” We also stated, “The expanding range suggests potential for heavy trending action, so aligning with the MSI trend will be key to capturing outsized gains.” With that context, and with the MSI opening in a narrow Bullish Trending Market State with extended targets above, we knew we wanted to go long but were hesitant to do so with Fed Chair Powell speaking at the open. Instead we waited and after a slight pop and drop at 9:55 am, we entered long at $638.50, expecting an outsized move higher. Sure enough this is exactly what we got as Powell signaled the possibility of 100 basis points of rate cuts beginning at the September FOMC meeting. At 25 basis points each this would amount to four cuts, although it is also possible the first cut is 50 basis points. As the saying goes, don’t fight the Fed, so with our long in hand and no valid MSI targets above, we set T1 at the premarket level of $641.60 which was reached in less than two minutes. The MSI began a series of rapid rescaling higher with extended targets above so we waited for the MSI to settle down before setting T2, finally taking T2 just after 11 am at MSI resistance at $646.25. We then had only our 10% trailer left and while SPY pulled back slightly, we knew better than to fight the long trend. We continued to hold our trailer and after a second test of MSI resistance at $646.25, and with a double top and massive gains on just a single trade, we decided enough was enough and took off the remaining 10% of our position before 2 pm, calling it a day. While there was a potential short setup later in the day, we had made so much on the first trade that, as we do daily, we went into profit protection mode and chose not to risk our gains. We start our weekend early, one and done, and what a one and a week it was, once again thanks to a clear plan, disciplined execution, and strong alignment between MSI signals, 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:
Monday has no scheduled news, and without an external catalyst, the session is expected to see some follow-through from Friday’s move, drifting higher while consolidating gains. The bulls are likely to defend $643 in an effort to push SPY toward new all-time highs, potentially as high as $650. A drop below $643, however, opens the door to $641, which may tempt the bears to test their luck. But for the bears to gain any traction, SPY must first close below $641 and then break $632 to generate momentum. The broader structure continues to favor the bulls, and for sentiment to meaningfully shift, the bears would need a decisive break below $625, which would raise the risk of a 10% or greater correction. Until then, we continue to favor long setups above $641, while remaining open to shorts on a confirmed break below that level or on a failed breakout above $646. 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 $646 to $658 and higher strike Calls while selling $645 to $643 Puts indicating the Dealers belief that prices have nowhere to go buy higher on Monday. Dealers do not sell at the money Puts unless they are certain prices will move higher. The ceiling for Monday appears to be $650, although $647 also looks significant. To the downside, Dealers are buying $642 to $58 and lower strike Puts in a 3:1 ratio to the Calls/Puts they’re selling/buying displaying little concern that prices could move lower on Monday. Dealer positioning has changed from bearish to slightly bearish/neutral.
Looking Ahead to Next Friday:
Dealers are selling SPY $646 to $670 and higher strike Calls indicating the Dealers belief that prices are likely to stall next week with a ceiling for the week likely at $650. To the downside, Dealers are buying $645 to $590 and lower strike Puts in a 3:1 ratio to the Calls they’re selling, reflecting a slightly bearish/neutral outlook for the week. For the week Dealer positioning has changed from bearish to slightly bearish/neutral. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.
Recommendation for Traders
With SPY closing at an all-time high of $645.31 and the VIX dropping sharply to 14.23, conditions now favor long setups, particularly on dips into $643 or clean breakouts above $647. Traders should target $650, $652, and $655 on continuation plays, while short trades are only recommended if SPY fails to hold $641, with downside targets at $638 and $636 or on a failed breakout above $646. Volatility remains low, but given the magnitude of Friday’s move, some digestion or profit-taking early in the week is possible. Use tighter stops and avoid chasing extended rallies. As always, review the premarket analysis posted before 9 AM ET to account for any changes in the model’s outlook and in Dealer Positioning.
Good luck and good trading!
