Market Insights: Wednesday, September 17th, 2025

Market Overview

US stocks closed mixed on Wednesday after the Federal Reserve delivered its first interest rate cut of 2025, reducing the federal funds rate by 25 basis points as expected. The S&P 500 slipped 0.12% while the Nasdaq declined 0.33%, both retreating modestly from recent highs. The Dow bucked the trend with a 0.57% gain, continuing its September recovery. The rate cut, largely anticipated by markets, was described by Fed Chair Jerome Powell as a “risk management cut,” noting that a weakening labor market now poses a greater threat than persistent inflation.

In addition to Wednesday’s cut, Fed officials signaled two more rate reductions are likely by year-end, reflecting a growing consensus that slowing job creation and deteriorating employment conditions outweigh current inflationary concerns. Political pressure continues to mount on the central bank, with newly confirmed Fed governor Stephen Miran, President Trump’s nominee, dissenting in favor of a deeper 50 basis point cut. Meanwhile, Governor Lisa Cook participated in the meeting after an appeals court rejected Trump’s attempt to remove her, highlighting ongoing tensions around Fed independence.

On the corporate front, Nvidia fell nearly 3% after reports surfaced that China has instructed its largest tech firms, including Alibaba, not to purchase the company’s AI chip customized for Chinese markets, effectively banning tens of thousands of pending orders. General Mills beat quarterly sales expectations but warned of a soft consumer environment, sending shares lower. Cracker Barrel remained in the spotlight following backlash over its now-shelved logo change. Wednesday’s session reflected a market in transition, recalibrating expectations around Fed policy, political dynamics, and macroeconomic resilience.

SPY Performance

SPY declined 0.12% to close at $659.18, giving back early gains after reaching a high of $661.72 intraday. The ETF opened at $660.04 and dipped as low as $654.31 before bouncing to settle just below the prior day’s close. Volume came in strong at 84.69 million shares, above the average, indicating elevated interest around the Fed announcement. Price action was volatile and somewhat disjointed, with the market initially rallying on the decision before reversing lower, then recovering late to finish near flat. Despite the pullback, SPY remains in a firm uptrend, and buyers continue to step in near key support zones.

Major Indices Performance

The Dow led all benchmarks with a 0.57% gain, buoyed by strength in financials and industrials. The Nasdaq dropped 0.33% as megacap tech stocks took a breather following the Fed announcement and weakness in Nvidia. The S&P 500 edged down 0.12%, while the Russell 2000 rose 0.17%, showing resilience despite the macro uncertainty. The divergence between indices reflects rotation and digestion of recent gains rather than broad-based risk-off behavior, suggesting continued underlying bullish sentiment.

Notable Stock Movements

It was a mixed day for the Magnificent Seven, with Nvidia leading the declines after falling 2.60% on reports of a Chinese directive banning domestic firms from buying its AI chips. Meta, Amazon, and Alphabet also closed lower, while Tesla, Apple, and Microsoft managed gains. General Mills gave back early gains after cautioning on the consumer environment. Oracle and Tesla saw follow-through from earlier strength, though their momentum faded into the close. The split performance in megacaps mirrors the broader market’s consolidation following extended upside.

Commodity and Cryptocurrency Updates

Crude oil slipped 0.82% to settle at $63.99, continuing its gradual move toward the model’s $60 target. Gold dropped 0.85% to close at $3,693, pulling back from recent highs as investors digested the Fed’s rate decision. Bitcoin declined 1.00%, ending above $115,600, pausing its upward momentum but maintaining a firm technical structure. While volatility remains contained, all three asset classes are poised to react sharply to macro developments in the coming weeks.

Treasury Yield Information

The 10-year Treasury yield rose 1.17% to close at 4.071%, continuing to hover near the crucial 4.1% level. While still safely below the 4.5% threshold that typically pressures equities, the recent uptick reflects lingering concerns over inflation and a cautious reaction to the Fed’s tone. Should yields climb above 4.8%, equities could face headwinds, and a move beyond 5% would likely trigger a substantial correction. For now, bond markets appear to accept the Fed’s pivot, though upcoming data will test that resolve.

Previous Day’s Forecast Analysis

Tuesday’s forecast projected SPY to trade between $656.25 and $664.25 with a bullish bias above $657. The model emphasized resistance at $662 and noted that Retail Sales might cause brief volatility, but FOMC would dominate price action. A breakout above $660 was flagged as a potential continuation signal, while a break below $657 could shift sentiment. Traders were advised to expect a choppy session with direction emerging post-announcement.

Market Performance vs. Forecast

Wednesday’s action validated much of the model’s guidance. SPY opened slightly higher and tagged a high of $661.72 before falling sharply to test the $654 zone, rebounding late to close at $659.18. The range was well within the model’s forecast, and the $660 area served as both resistance and intraday inflection. The predicted volatility surge post-FOMC played out, and the market followed the expected path of early indecision followed by a reaction-based trend.

Premarket Analysis Summary

Wednesday morning’s premarket notes at 8:37 AM set SPY’s bias level at $660.25 and warned that price action would likely stay bounded until after the FOMC announcement. It noted $659.25 as critical support and anticipated downside to $657 and possibly $654.25 if that level broke. On the upside, targets were $661.25 and $664.25, but only if SPY cleared $660.25. The model cautioned against pre-positioning and advised traders to wait for post-announcement reactions.

Validation of the Analysis

The premarket forecast was spot on. SPY stayed range-bound into the FOMC release, initially popped above $660.25 to reach $661.72, then failed and fell to $654.31, just shy of the $654.25 target before rebounding into the close. The model accurately predicted the chop, the breakout attempt, and the likely reversal. Traders who followed the roadmap had clear risk parameters and actionable inflection points to navigate the volatility effectively.

Looking Ahead

Thursday brings Unemployment Claims, though the report is unlikely to move markets significantly unless it comes in far weaker than expected. With the Fed decision now behind us, the market may refocus on earnings, macro data, and geopolitical developments. SPY remains in a strong trend, and while a pullback is overdue, bulls continue to defend support. Traders should watch for continuation above $661 or weakness below $655 as cues for short-term direction.

Market Sentiment and Key Levels

SPY closed at $659.18, just below breakout territory. Key support is now at $657, $656, $655, and $648. Resistance remains at $661, $665, and $670. Bulls retain control above $645, and the broader trend remains firmly intact. Dips continue to attract buyers, and with megacaps still largely resilient, sentiment remains constructive. Only a decisive break below $640 would shift the longer-term picture.

Expected Price Action

Our AI model projects SPY to trade between $655 and $665 on Thursday. The dominant Call flow suggests trending behavior with occasional consolidation. While the FOMC event is behind us, Thursday could bring digestion or a trend day depending on jobless claims and broader sentiment. Bulls will look to defend $657 overnight, and failure there could test $655 and $650. A break above $661 would confirm continuation, with $665 and $670 as upside magnets. The market remains in buy-the-dip mode above $645.

Trading Strategy

Long trades are favored above $657, targeting $661 and $665. Short setups may be considered on failed breakouts above $661 or confirmed breaks below $655, targeting $650 and $648. With volatility still muted, traders should stay nimble, size conservatively, and favor intraday trades over swing positions. The VIX closed at 15.72, still well below the danger zone, suggesting risk appetite remains intact.

Model’s Projected Range

SPY’s projected range for Thursday sits between $651.25 and $666.25, with the Call side dominating in an expanding band that suggests trending price action with intermittent periods of chop. Unemployment Claims are due, but they are unlikely to move markets much unless they come in particularly weak. SPY posted another new all-time closing and intraday high yesterday, which was matched today with less volatility from FOMC than expected. Weakness continues to be quickly bought, with SPY now testing the breakout confirmation level of $660. A decisive close above this level would keep prices marching higher. Overnight, the market moved mostly sideways, dipping before FOMC and then running up post-release, but that run failed quickly and SPY tested $654 before reversing to finish the session nearly unchanged at $659.18. Volume was higher than average, and with SPY well above the critical $645 threshold and every dip being bought, the bulls remain in complete control of the broader narrative. As such, more new highs should be expected. While a healthy pullback is overdue, the odds of a sell-the-news event are now less than a coin toss. The strong bounce off the trendline from the April lows continues to point toward higher prices. Overnight, the bulls will defend $657, which must fail for price to move lower. A failure there opens the door to $655, while a break below that would bring $650 into play. Until SPY falls to $640 or lower, however, the bears remain sidelined. Our base case remains a 10 to 15 percent pullback at some point this year, yet we continue to view any weakness as a buying opportunity and recommend buying every dip above $645. For Thursday, resistance is at $661, $665, and $670, with support at $657, $656, $655, and $648. Since reclaiming $585, SPY has held a steady uptrend fueled by dip buyers. Today Mag stocks were mixed, with half declining and the other half rallying. Until consistent weakness emerges in these leaders, or ETH closes below $4300, the market is likely to grind higher. We continue to favor quick profit taking and caution with overnight holds. The VIX fell 3.91 percent to 15.72, and while September often sees VIX reach 20, contango in VXX futures suggests volatility may drift lower. If you have not added protection to your long book, now is the time. VIX below 23 supports the bullish case, but a breakout above it could finally spark the long-anticipated pullback. SPY closed firmly within a redrawn bull trend channel from the April lows, as the model continues to see higher odds of a continuation of the bull trend than a pending selloff. 

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the day in a wide Ranging Market State, with SPY closing at the upper end of the range. Extended targets printed in the morning session and during the test of the day’s lows, but only sporadically. The MSI rescaled overnight from a narrow ranging market state to a very narrow bearish state which saw price weaken heading into FOMC. But after FOMC, the MSI rescaled both higher and lower but each rescale was relatively narrow and not to be trusted. As such price traded in a tight range for an FOMC day and closed the day unchanged. For Thursday with the MSI in a ranging state, we expect more chop but with an upward drift. It would not surprise us however to see SPY retest $657 where we expect the bulls to step in and support price. MSI support is $656.30 with resistance at $659.93.
Key Levels and Market Movements:
There was no newsletter on Tuesday due to a technical issue, but our reporting has been consistent in favoring the bull trend and buying dips. In the premarket we set levels that were reached virtually to the penny, giving us plenty of context to trade the session. With the MSI opening in a ranging market state after coming off a narrow bearish state overnight at the $660 major level, we looked for a short opportunity. That came on a less-than-perfect failed breakout at 9:52 AM. While we do not favor trading with the MSI in a ranging state, and we expected chop heading into FOMC, we decided the odds favored a continuation of the overnight trend and went short at $660.30 with a first target at MSI support at $659.12. That target was reached quickly, so we set T2 at the premarket level of $657. While waiting, the MSI rescaled lower and printed support at $658.30, so we took that level for T2 and T3 since it was already 1 PM with FOMC less than an hour away. After the announcement, we waited for SPY to settle down but decided to fade the first move higher, which formed a textbook failed breakout. With no extended targets above, we entered short at $660.75 with a stop just above the day’s highs in case we were wrong. Long-time readers of this newsletter know the first directional move after a major news event is often a trap, and we believed the odds of failure were higher than continuation. We set T1 at the premarket level of $659.25, which also aligned with a rapidly rescaling MSI, then set T2 at the premarket level of $657 given the volatility. Price reached $657.14, but the action suggested a failed breakdown, so we exited the short and moved into profit protection mode with two winning trades already secured. SPY reversed back to $660, and while we considered another short, we decided not to risk profits already earned. A bit later, SPY fell hard and broke through multiple support levels, reaching the premarket level of $654.25, where it set up a textbook failed breakdown. After waiting for extended targets to stop printing, we went long at $657 and set T1 at the premarket level of $659.25 with T2 at MSI resistance at $659.90. Both targets hit quickly, and with three strong wins on the day, we closed our trailer at $660.25, another premarket level, and called it a day. Once again, our success came from 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:
Thursday has Unemployment Claims, but the market is unlikely to react unless the report is particularly poor. We continue to favor buying dips as it is likely the market grinds higher into Friday. The bulls will defend $657 overnight, which should be treated as a buying opportunity. Above this level we favor buying dips, while below it we would consider shorts. We will also look for short setups on failed breakouts above today’s high. Even if $657 fails, the bears will only come to life on a drop below $640. As such, it remains likely we continue to see new all-time highs, and our bias stays to buy on dips. 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 $660 to $677 and higher strike Calls implying the Dealers belief that prices may move sideways on Thursday. The ceiling appears to be $665. To the downside, Dealers are buying $659 to $600 and lower strike Puts in a 3:1 ratio to the Calls they’re selling displaying little concern that prices could move lower tomorrow. Dealer positioning is unchanged from slightly bearish/neutral to slightly bearish/neutral.
Looking Ahead to Friday:
Dealers are selling SPY $660 to $685 and higher strike Calls implying the Dealers belief that prices will likely pause around current levels. The ceiling for the week appears to be $665. To the downside, Dealers are buying $659 to $540 and lower strike Puts in a 4:1 ratio to the Calls they’re selling, reflecting a bearish outlook for the week. This is likely more hedging than a bearish prediction. For the week Dealer positioning is unchanged from bearish to bearish, We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders

SPY closed at $659.18, slightly below recent resistance. Long trades remain favorable above $657, targeting $661 and $665. Shorts may be taken on failed moves above $661 or breaks below $655. Use model and MSI levels to manage risk, and maintain discipline as the market consolidates gains. The uptrend remains intact, but volatility could pick up into month-end.

Good luck and good trading!