Market Insights: Tuesday, August 25th, 2026
Market Overview
US stocks pushed higher Tuesday as investors largely shrugged off an escalating trade fight with Canada, even after Canada's Finance Department announced retaliatory tariffs in response to the 50% duties the Trump administration slapped on over the weekend. The Dow and S&P 500 each gained 0.3%, while the Nasdaq outperformed with a 0.6% advance, bouncing back from Monday's tech-driven slide. Worth noting — both sides have so far kept oil off the table in this dispute, even as steel, dairy, and other goods get caught in the crossfire.
Bitcoin briefly crossed $80,000 for the first time in three months after Treasury's bond market intervention stoked dollar debasement fears and pushed investors toward alternative assets, with gold also continuing its climb. On the economic front, new home sales and consumer confidence both dropped to their lowest readings since January, painting a cautious picture heading into the Federal Reserve's Jackson Hole Symposium later this week — where newly appointed Fed Chair Kevin Warsh will deliver his first major speech. Earnings were in focus too, with Intuit and Zoom set to offer a window into the health of the software sector, while DICK's Sporting Goods cratered 30% after missing second-quarter expectations and slashing its full-year outlook citing tough conditions in the athletic retail market.
SPY Performance
SPY opened at $766.16 and held up reasonably well from the jump, with buyers showing just enough interest to keep price from rolling over early. The high of $766.78 came in relatively tight to the open, and while that doesn't scream explosive upside conviction, the session stayed constructive for most of the day. Price dipped to a low of $763.05 before recovering back toward the upper end of the range, closing at $765.85 — right near the top of the day's $3.73 spread. Closing near the high of the session is a mild positive for the bulls, even if the overall range remains compressed.
SPY finished up 0.31% on the day, a modest gain that claws back the prior session's slip and keeps the market in its recent holding pattern. Volume came in at 25.44 million shares, below average once again, so this wasn't exactly a thunderous endorsement from the buy side. Low-volume advances carry a disclaimer — they can fade just as quietly as they appeared without real participation backing them up. That said, the VIX dropping 2.52% to 15.45 adds a bit of credibility to the move. When price ticks higher and volatility steps back at the same time, the tape at least tells a consistent story. SPY is still rangebound and searching for a catalyst, but today's price action was incrementally more encouraging than what we saw the session before.
Major Indices Performance
The Nasdaq led the way today, climbing 0.66% to take the top spot among the major benchmarks. That kind of outperformance from the growth-heavy index signals a modest but meaningful shift back toward risk appetite, with tech-oriented names finding enough buying interest to push the composite into the green. The S&P 500 also finished positive on the day, consistent with the broadly constructive tone across most of the market.
The Dow added 0.3%, a solid showing that kept the blue-chip index in step with the broader market's upward drift. Unlike the prior session where the Dow stood alone in positive territory while everything else sold off, today's action was more synchronized — a healthier sign that buying wasn't purely defensive in nature. When the Dow and Nasdaq are both moving in the same direction, it suggests a wider swath of investors felt comfortable putting money to work.
The Russell 2000 finished up 0.39%, slotting in between the Dow and Nasdaq. Small-caps participating in a green day is encouraging after the recent choppiness that's defined this group, though the gains were modest enough to keep the bigger picture murky. Small-caps still have a lot to prove in this rate environment before bulls can declare anything close to a durable recovery. Still, a day where all major indices finish in the green — even if the moves are measured — is the kind of broad participation that stabilizes sentiment and keeps the door open for follow-through.
Notable Stock Movements
NVIDIA took the spotlight today as the clear standout in the Magnificent Seven, surging as much as 2.19% to lead what was an otherwise mostly green but tempered session for the group. When the cohort's biggest mover is the AI infrastructure kingpin pushing to the upside on a day where broader volume is running below average, it signals that institutional money is still willing to step into the highest-conviction growth names even when the tape lacks energy. NVIDIA carrying the flag here matters — this is one of the two names that carries the most narrative weight around AI sentiment, and seeing it back in the lead is a net positive for the group's story.
The Magnificent Seven as a whole had a mostly green day across the board, which aligns reasonably well with the modest gains seen in the broader market today. The exceptions were Apple, Alphabet, and Amazon, with Amazon pacing the laggards by dropping as much as -0.39%. That's a relatively contained pullback compared to some of the reversals we've seen recently from the high-beta names in this group, so it's hard to read too much into the downside here — this is digestion more than distribution. Still, having three of the seven in the red while the broader tape is pushing higher keeps the session from feeling like a clean, coordinated move.
What today's performance signals for broader market sentiment is cautiously constructive. A mostly green showing from the Magnificent Seven on a low-volume up day suggests the underlying bid in these names hasn't faded, and NVIDIA reclaiming the leadership role adds credibility to that read. The VIX pulling back 2.52% to 15.45 reinforces the idea that fear is cooling off, and that's the kind of backdrop where quality growth tends to find buyers. The group hasn't quite delivered the emphatic, all-hands-on-deck rally that would signal a true sentiment shift, but a session like this — quiet, mostly positive, led by the right name — is the kind of base-building that precedes one.
Commodity and Cryptocurrency Updates
Crude oil took a significant hit on the session, dropping 4.22% to settle at $81.42. That's a meaningful pullback, but it doesn't erase the bigger picture — black gold remains well above $70 and continues to defy longer-term expectations. One sharp down session can shake confidence, but the structural forces that pushed crude to these elevated levels haven't disappeared overnight. Geopolitical tensions, supply dynamics, and global demand resilience have all played a role in keeping prices elevated, and with crude still firmly above that key threshold, the inflationary implications for Fed policy haven't changed in any meaningful way. A sustained move above $70 was always the line that complicated the Fed's math, and despite today's slide, energy is still sitting in uncomfortable territory for policymakers.
Gold continued its impressive run, adding another 1.74% to close at $4,722. The metal is grinding higher with remarkable consistency, and today's gain keeps the momentum fully intact. Central bank demand, macro uncertainty, and inflation concerns remain the structural pillars driving this rally, and buyers keep showing up with conviction rather than waiting for dips. The bull case for gold continues to look as strong as ever.
Bitcoin had a quiet session, slipping just 0.20% to close just below $78,804. It's a minor blip rather than anything alarming, and the overall tone for crypto remains constructive. Nothing in today's price action suggests the broader momentum is broken — buyers have been patient and consistent, and that hasn't changed. The path of least resistance for Bitcoin still points higher.
Treasury Yield Information
The 10-year Treasury yield continued its retreat today, dropping 1.38% to close at 4.640%. That's a meaningful step in the right direction — two consecutive sessions of pullback now after the pressure that had been building, and the market is starting to breathe a little easier. But "easier" is a relative term when you're still sitting 14 basis points above the level where this framework says equities begin feeling real strain.
At 4.640%, the yield is now 16 basis points clear of the 4.8% threshold where selling tends to accelerate and market damage gets more serious. That's a notably better cushion than the razor-thin margins we were watching just a few sessions ago, and it matters. The 4.8% line isn't looming quite as menacingly today, which helps explain why equities found their footing and pushed modestly higher. But let's not get carried away — 4.640% is still well above 4.5%, and that means the ceiling on any sustained rally remains in place. The pressure doesn't disappear at 4.640%, it just eases slightly.
The 5% level, where this framework flags genuinely serious trouble, sits 36 basis points away. The 5.2% correction territory — where a 20% or more drawdown becomes a real conversation — feels more distant than it did a week ago. That's progress. What matters now is whether this two-session pullback has real momentum behind it or whether it stalls and reverses. A continued move toward 4.5% would give equities the runway they need to extend any gains. Until that happens, yields are still the dominant risk factor in this market, and one hot inflation print or a weak Treasury auction could reverse this progress in a single session.
Previous Day’s Forecast Analysis
Yesterday's forecast projected SPY to trade within a fourteen-point range, with $759 serving as the downside floor and $773 as the max upside ceiling. The bias leaned modestly bearish heading into Tuesday's session, driven by Monday's close at $763.54 sitting in the lower portion of the projected range and the VIX rising 4.69% to 15.84 — a quiet signal that fear was beginning to creep back into the market. The model identified $767 as the defining line separating genuine repair from another leg lower, with $770 standing as the heaviest overhead resistance and $772 as the level bulls truly needed to reclaim to shift the near-term tone. On the downside, $765 was flagged as the first level to respect, with $764 serving as the immediate structural floor and $762 as the point of last hope for buyers before the door opened to $759.
The trading strategy called for dialed-back position sizing in the 60-70% range given mixed signals, with stop-losses kept tight in the 0.75-1.0% band from entry. On the long side, the preferred entry was a clean retest of the $763.50-764 zone, targeting $765.22 initially and $767.85 as the stretch target, with stops below $762. On the short side, a decisive break below $762.08 was the trigger, with $759-760 as the primary profit target and $757 as the secondary destination if sellers gained conviction, with stops above $765. The overarching message was clear — wait for volume to confirm direction before committing, and resist chasing price in either direction without that confirmation.
Market Performance vs. Forecast
Tuesday's session opened at $766.16, pushing immediately above the $765 level that the model had identified as the first critical line of defense — and the one bulls needed to reclaim with conviction before getting excited about the upside. That open effectively validated the long side of the strategy right out of the gate, landing the session above the preferred long entry zone of $763.50 to $764 and putting buyers in immediate control of the narrative. The full session range of $763.05 to $766.78 sat comfortably within the projected $759 to $773 window, meaning the model contained the entire day's price action without getting stretched in either direction.
What the forecast got right was the structure. The model had identified $765 as the defining line separating repair from further weakness, and Tuesday's open above that level — followed by a close of $765.85 — confirmed the market's willingness to hold that zone with conviction. The session never seriously threatened the downside levels, with $763.05 as the low holding well above the $762 floor that had been flagged as the point of last hope. The VIX cooperating by dropping 2.52% to 15.45 aligned with the model's position-sizing guidance — the prior day's caution about keeping exposure in the 60-70% range was appropriate given the mixed signals, and Tuesday's measured, low-volatility grind higher rewarded disciplined entries rather than aggressive positioning. Volume coming in below average confirmed this was not a momentum-driven breakout session, which the strategy had anticipated by warning against chasing moves without volume confirmation. The framework mapped Tuesday's key levels accurately, and the slight bullish resolution reinforced that reading the structure and waiting for confirmation remains the edge the model consistently delivers.
Premarket Analysis Summary
The premarket analysis posted at market open identified SPY spot at $767.04 in a call-dominated tape, with buyers having reclaimed ground after Monday held $764 and produced a bounce. The expected move was set at six points, and the defining level of the day was $768 — flagged as the gate sitting just above spot and the first real test of whether the bounce had legs. Upside targets were set at $769, $770, $771, and $773, with $770 identified as the next decision point where price would want to stall, $771 as the level bulls genuinely needed to put last week's decline behind them, and $773 standing as max upside at the top of the expected move. On the downside, $766 was the first level to watch sitting just beneath spot, $765 was identified as the most important level below and the site of the heaviest battle, $764 was flagged as the point of last hope and the floor holding Monday's turn together, and $761 stood as max downside at the bottom of the expected move. The analysis noted that with $767 and $768 stacked right on spot, the first clean break would decide whether this tape repaired or rolled over again.
The actual session resolved to the downside. SPY opened at $766.16, already below the $767 spot reference and never threatening the $768 defining level, leaving every upside target untouched. The high of $766.78 couldn't even clear the $767 round number, confirming sellers had control of the gate before the bounce could build any momentum. Price then faded through the $766 caution zone and pushed to a low of $763.05, slicing through the $765 battleground and tagging the area just above $761 max downside before buyers finally responded. The close at $765.85 for a gain of 0.31% was technically a positive print but masked a session that tested critical support rather than built on the prior day's recovery. The VIX dropping 2.52% to 15.45 offered a slightly more constructive backdrop, though the inability to challenge any upside target suggested the bounce remained on shaky footing heading into the next session.
Validation of the Analysis
Tuesday's session validated the premarket framework, though once again the resolution came on the downside — and the analysis mapped every meaningful level before the open with sharp precision. SPY opened at $766.16, immediately below the 766 level flagged as the first line to watch and the spot where a stalling bounce would begin to show its cracks. The premarket was direct: losing 766 cleanly would stall the bounce before it started, and the open confirmed exactly that. Buyers never found the traction needed to push through 768, the gate identified as the defining level above, and the session never came close to testing it. The high of $766.78 barely lifted above the open before sellers took control, keeping the tape pinned beneath every upside target listed in the analysis.
The downside roadmap then guided the action with clarity. The premarket identified 765 as the most important level below spot and the site of the heaviest battle — price broke beneath it and the close of $765.85 came right back to test it from below, a textbook defense of a level that was called out hours earlier. More telling was the low of $763.05, which drove directly into the 764 zone identified as the point of last hope and the floor holding the prior day's turn together. The analysis explicitly warned that 764 mattered more the second time it was tested, and price found support right there, stopping the flush cold and allowing buyers to stabilize the tape. The VIX dropping 2.52% to 15.45 reflected the controlled nature of the pullback, consistent with the analysis framing 764 as an absorption zone rather than a breakdown level. Traders who faded the open beneath 766, targeted 765 as resistance on any bounce attempt, and covered into 764 had a well-structured session with defined risk and clean levels at every turn.
Looking Ahead
Wednesday's economic calendar is quiet, with no high-impact releases on the schedule to shake up the market in either direction. That puts the burden squarely on price action and trader sentiment heading into the session. Without a macro catalyst to anchor the narrative, Wednesday becomes a tape-reading day where market internals, breadth, and follow-through from Tuesday's moves do most of the heavy lifting.
With nothing on the calendar to force a hand, Wednesday shapes up as a positioning session where the path of least resistance will reveal itself through volume and conviction. Watch for whether buyers are willing to step in with size or whether the market drifts without a fresh story to rally around. A quiet calendar isn't neutral — it either gives an existing trend room to extend or exposes just how fragile the momentum underneath it really is.
Market Sentiment and Key Levels
The directional bias today tilts cautiously bullish, though the gains were modest enough that bulls haven't fully taken command. SPY added 0.31% on below-average volume of 25.44M shares, which suggests the advance lacked real conviction — more of a grind higher than a powerful thrust. The encouraging sign is the VIX dropping 2.52% to 15.45, pulling fear out of the market and giving bulls something to work with heading into the next session. The tape was broadly positive with all major indices finishing in the green, though the mixed performance within the Magnificent Seven is a reminder that not everything is firing on all cylinders.
Key resistance sits at $766.78, today's intraday high. A clean push above that level on stronger-than-average volume would signal that bulls are building momentum and could open the door to a meaningful continuation higher. On the downside, $763.05 — today's intraday low — is the floor that matters most right now. If SPY slices through that level with conviction, the tone shifts quickly and bears could take back control of the short-term narrative. Gold surging 1.74% to $4,722 adds an interesting wrinkle — that kind of move in the safe-haven space suggests there's still some nervousness underneath the surface, even as equities stay supported. Yields pulling back modestly are a quiet tailwind here, and if that continues it could give equities the room they need to push higher. Bitcoin slipping slightly and closing just below $78,804 is worth monitoring — a further rollover in crypto wouldn't help risk sentiment. Bulls hold a slight edge, but this market still needs a volume catalyst to make that advantage stick.
Expected Price Action
Wednesday's session brings actionable intelligence generated by our AI model, with SPY projected to trade within a range defined by $761 on the downside and $773 as the max upside target. That twelve-point window puts this squarely in trending territory, meaning participants should expect directional conviction with room for price to move with purpose rather than chop around aimlessly. With Tuesday's close at $765.85 sitting in the middle of the projected range and the VIX dropping 2.52% to 15.45, fear is quietly easing and the tape is leaning modestly bullish heading into Wednesday's open.
The $768 level is the defining line that separates genuine repair from another stall. Reclaim and hold $768 cleanly and $769 comes quickly, with $770 standing as the next real decision point where price should want to pause and prove itself. Above that, $771 is the level bulls truly need — a clean hold there would put last week's decline firmly in the rearview and shift near-term tone meaningfully higher. Beyond that, $773 caps the expected move top as max upside and the ceiling bulls must clear to change the broader narrative. On the downside, $766 is the first level to respect, sitting just beneath Tuesday's close, meaning any early softness that loses $766 cleanly could stall this bounce before it builds momentum. Lose $766 and $765 becomes the most important battleground below — that's where the heaviest defense sits and where sellers take real control on a clean break. Under $765, $764 is the point of last hope and the floor holding this week's structure together, having already held once and carrying even more weight a second time around. Failure there opens the door to $761 at the bottom of the expected move. Bias leans modestly bullish given the positive close and fading fear, but with $767 and $768 stacked right above spot, the first clean break through that gate decides whether Wednesday builds on Tuesday's gains or rolls over again.
Trading Strategy
The VIX dropping 2.52% to 15.45 is a constructive signal — fear is quietly bleeding out of the market, and that pullback in volatility on a session that closed modestly higher tells you the hedging community is backing off the defensive posture. At 15.45, the VIX is sitting comfortably in low-anxiety territory, historically associated with orderly, grind-higher price action. When the VIX dips on below-average trading volume, it often signals that complacency is creeping back in, which can support further upside but also means the market may be underpricing risk in the near term. Keep position sizing in the 65-75% range — the VIX is giving a relatively clean green light, but below-average participation keeps a full throttle approach off the table. Maintain stop-losses in the 0.75-1.0% band from entry and stay disciplined about not chasing extended moves without volume confirmation.
In a rising market scenario, bulls need to build on the session close above $765 and push through the $766.78 high with meaningful follow-through. The preferred long entry is a controlled pullback and hold of the $764-764.50 zone on any early morning softness, with the initial profit target at $767.50 and the stretch target at $769-770 if buyers can generate sustained momentum and volume expansion. Stops on longs belong below $763 to protect against a failed breakout without absorbing unnecessary drawdown. This is an add-on-strength environment rather than a chase — only scale into long exposure when price clears $766.78 with participation to back it up.
In a falling market scenario, the critical floor to respect is the $763.05 session low. A decisive break below that level on renewed selling opens the door to a short entry targeting the $760-761 zone as the primary profit destination, with $758 as the secondary target if sellers find conviction and volume begins building. Stops on shorts belong above $766 to keep risk cleanly defined. If the market opens with early weakness and rolls straight through $763 without a recovery bid, treat that as the trigger to initiate shorts with measured size. Cover into support levels methodically rather than pressing the move, and don't let the relatively calm VIX reading at 15.45 breed excessive complacency — low volatility environments can reverse sharply when the tape shifts, and a VIX that has been suppressed tends to spike fast when sellers finally show up.
Model’s Projected Range
SPY's projected maximum range for Wednesday is $759 to $771, with the Put side dominating in an expanding band that suggests trending price action with intermittent chop. Wednesday brings no economic news due out so the market will trade on technicals. SPY closed at $765.85, up 0.31%, after opening at $766.16, tagging a high of $766.78, and pulling back to a low of $763.05 before settling near the middle of the day's range on below-average volume — a fairly contained session with modest upside follow-through. SPY is trading near our model's first support at $765, and broader macro sentiment continues to digest ongoing trade policy uncertainty and its potential drag on growth expectations. If our model's first resistance at $769 breaks, SPY targets $770 next, while a break of first support at $765 opens the door toward $760, and if that gives way there is little to keep price from falling toward $755. 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 $769, $770, $771, $772, while support rests at $765, $760, $759, $755. We favor buying dips at $765 given SPY closed right at that first model support with the session showing resilience. Bitcoin slipped 0.20% to close below $78,804 while MAG stocks were mostly green on the day led by NVIDIA up 2.19%, with Amazon as the lone laggard down 0.39% — crypto weakness is worth watching but the strength across most Mag names supports the broader market tone. The VIX closed at 15.45, down 2.52%, suggesting fear continues to ease and options markets are pricing in a calmer near-term environment. SPY closed just above the lower line of the trend channel with structural support near $765, keeping the broader uptrend structure intact heading into Wednesday's session.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended in a Bullish Trending Market State with SPY closing at $765.85. SPY closed inside the MSI range, which means $765.39 remains support and $766.15 remains resistance heading into Wednesday. Extended targets were not printing at the close, though they were visible in the premarket session printing above, signaling to experienced MSI readers that the early morning was setting up with bullish momentum before the regular session began. The MSI rescaled higher overnight into a wide Bullish Trending state with extended targets printing above, keeping price elevated near $767 through the premarket. At the open the MSI rescaled lower with a sharp dip to $763 as extended targets briefly printed below before abruptly stopping, which was a key signal for traders watching the framework. As soon as those targets stopped the market reversed, and the MSI began rescaling higher with price recovering back toward $766 and settling into a narrow Bullish Trending state for the remainder of the afternoon. Price ground sideways between $765 and $766 for most of the day, with the MSI holding a very tight range that reflected genuine consolidation rather than strong directional conviction. The narrow $0.76 spread at the close is about as compressed as it gets, and that kind of tightness typically signals that price is coiling rather than setting up for a clean trending move. The MSI is forecasting a session that is likely sideways to possibly higher as the narrow Bullish Trending state suggests consolidation rather than strong trending. That said, the bulls are likely to maintain pressure to the upside. Any failure of MSI support is likely to see SPY retest the day's lows. MSI support is $765.39 with resistance at $766.15.
Key Levels and Market Movements:
Monday we stated, "Bulls want to see overnight price hold above $763.1 and the MSI rescale into a Bullish Trending state, which would open the door to testing $764.1 above and potentially pressing toward Friday's highs if extended targets begin printing above," and added, "If the MSI rescales higher overnight into a Bullish Trending state and $763.1 holds as support, buying dips toward that level targeting $764.1 above is the preferred trade for Tuesday," while also noting, "with SPY closing at $763.54 and the potential for a Turnaround Tuesday setup, the possibility of at least an attempt to test Friday's highs is on the table if SPY can find traction and clear $764.1." That framework set traders up well for what unfolded across Tuesday's session.
The MSI rescaled higher overnight into a wide Bullish Trending state with extended targets printing above, keeping price elevated near $767 through the premarket and confirming that the bulls had indeed seized control overnight. SPY opened at $766.16 right at the high end of the prior session's resistance and immediately ran to a high of $766.78 before sellers stepped in and the MSI rescaled lower at the open. That rescale triggered a sharp dip down to $763.05, the session low, as extended targets briefly printed below. The moment those targets stopped printing, the selling pressure evaporated and price reversed sharply, which is precisely the kind of signal the MSI framework is designed to identify in real time. From there the MSI rescaled higher and price grinded steadily back toward $766, settling into a narrow Bullish Trending state for the balance of the afternoon. The remainder of the session saw SPY chop sideways in a tight band between $765 and $766, offering clean setups for traders buying dips to MSI support and targeting resistance on the other side of that range. SPY traded a high of $766.78, a low of $763.05, and closed at $765.85, finishing the day up 0.31% on volume of 25.44 million shares, which came in below average and reflected a low-conviction summer tape. The VIX dropped 2.52% to 15.45, signaling that anxiety eased as the session stabilized and bulls maintained their footing into the close. At minimum it was a 3-for-3 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:
Wednesday has light economic news so the market is likely to move more sideways to up than trend given the Bullish Trending state at the close. With the MSI closing in a Bullish Trending state but carrying a spread of just $0.76, the energy behind any directional move is suspect. That kind of compression in a bullish configuration typically means the market is pausing to gather itself rather than launching into a sustained rally, and with no high-impact catalyst on the calendar to shake price loose in either direction, chop remains the path of least resistance. That said, with $800 still clearly in the market's sights and Jackson Hole on the horizon, any clarity on Fed policy could be the catalyst needed to push SPY toward new all-time highs. The bulls have the better hand as long as the MSI holds its Bullish Trending structure overnight, but the narrow width demands patience and discipline before committing to any directional trade.
Bulls want to see overnight price hold above $765.39 and the MSI maintain or strengthen its Bullish Trending state, which would open the door to testing $766.15 above and potentially pressing higher if extended targets begin printing above. If the MSI confirms that structure overnight and $765.39 holds as support, buying dips toward that level and targeting $766.15 and above becomes the preferred approach for Wednesday. Bears, on the other hand, want to see $765.39 fail to hold overnight, which would put renewed pressure on Tuesday's session low at $763.05 and open the door to lower levels beneath the current range. Any failure of MSI support at $765.39 is likely to see SPY retest the day's lows quickly, so that level deserves close attention at the open.
The most actionable setup in a narrow Bullish Trending MSI without extended targets at the close is to respect both sides of the range and let the MSI confirm its state before committing to a direction. If the MSI holds or rescales higher overnight and $765.39 supports price, buying dips toward that level and targeting $766.15 is the preferred trade for Wednesday. If instead the MSI rescales lower and $765.39 fails at the open, selling any rally back toward that level and targeting Tuesday's session lows becomes the cleaner setup. A Ranging state at Wednesday's open is entirely plausible given the compressed close, and in that environment failed breakouts above $766.15 and failed breakdowns below $765.39 offer the highest-probability setups. The bulls are likely to maintain pressure to the upside, but the narrow MSI spread means that pressure may not have the energy to follow through without a fresh catalyst to confirm the move.
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 $767 to $782 and higher strike Calls, indicating the Dealers' belief that prices will continue to rise Wednesday. The ceiling for Wednesday appears to be $769. Notably, Dealers are selling ATM Puts at $764 to $766 in small size, and Dealers do not sell ATM Puts unless they believe there is a floor in the market at $764. To the downside, Dealers are buying $763 to $705 and lower strike Puts in a 3:1 ratio to the Calls they're selling, displaying measured but real concern that prices could move lower. They remain hedged, implying limited upside conviction. Below $763 is bearish and above $766 is bullish with everything in between expected to be choppy. Should SPY fail to hold $764, the zone from $758 to $763 sets up for indecisive price action with false breakouts in both directions. Dealer positioning is unchanged at neutral/slightly bullish.
Looking Ahead to Next Friday:
Dealers are selling SPY $767 to $785 and higher strike Calls, indicating the Dealers' conviction that prices will continue to rise into the end of next week. The ceiling for next week appears to be $772. Dealers are selling ATM Puts broadly at $762 to $766 into August 28, and Dealers do not sell ATM Puts unless they believe there is a floor in the market at $762. This signals real conviction that the rally has legs. To the downside, Dealers are buying $761 to $655 and lower strike Puts in a 4:1 ratio to the Calls they're selling, displaying continued hedging despite their bullish lean. There is clear resistance at $767 to $772, and Dealers are positioned for a continuation of the rally anticipating further upside into late August. Remain bullish above $762, but below $760 and especially $756 the posture shifts bearish. 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 $765.85 and VIX dropping 2.52% to 15.45, the tape leans constructive. Favor longs above $765.85 with stops below $763.05, and stay cautious if price slips under that floor.
Size down given below-average volume and keep risk tight. 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!
