Market Insights: Thursday, September 25th, 2025

Market Overview

US stocks extended their decline for a third straight session Thursday as Wall Street digested an unexpected drop in jobless claims and a sharp upward revision to GDP, complicating the path forward for interest rate cuts. The S&P 500 fell 0.47%, the Nasdaq slipped 0.50%, and the Dow declined 0.38% as investors reassessed the outlook for monetary policy amid signs of a still-strong economy and growing uncertainty within the Federal Reserve.

Economic data out Thursday revealed that US GDP rose at an annualized rate of 3.8% in the second quarter, rebounding sharply from a 0.6% contraction in Q1 and easily beating expectations for 3.3% growth. At the same time, weekly jobless claims fell more than expected to 218,000, while continuing claims also dipped slightly to 1.92 million. The combination of robust growth and a resilient labor market challenged the narrative for near-term easing, especially as Fed officials remain divided over the appropriate policy path. The shift in tone has weakened the supportive backdrop that powered the recent rally, which some now argue may have pushed valuations, especially in AI-linked names, too far too fast.

Big Tech stocks were broadly lower, led by a 4% drop in Tesla and continued selling in Oracle, while Nvidia and Netflix bucked the trend. Intel jumped nearly 10% after news that the chipmaker is seeking a strategic investment from Apple to boost collaboration, though analysts expressed skepticism that a formal partnership is imminent. Bernstein’s Stacy Rasgon called a foundry agreement between the two “very premature,” highlighting Apple’s reliance on TSMC for its custom silicon. Nevertheless, the news injected fresh enthusiasm into an otherwise weak tape.

Costco was set to report earnings after the close, with investors expecting strong sales driven by consumer demand for value in a persistently uncertain economic environment. All eyes now turn to Friday’s PCE inflation report, the Fed’s preferred measure of price pressures, which could either reinforce the case for staying higher for longer or revive hopes for policy easing before year-end.

SPY Performance

SPY fell 0.47% to close at $657.97 after opening at $657.94 and trading between $659.41 and $654.41 during the session. Volume surged to 82.89 million shares, well above average, confirming a third consecutive day of selling. While bulls defended the $655 level twice intraday, the inability to hold above $660 suggests the short-term trend has shifted. Though buyers continue to step in at key support levels, the increasing volume on down days signals profit-taking and caution heading into Friday’s inflation data.

Major Indices Performance

The Nasdaq led losses with a 0.50% decline, followed by the S&P 500 at -0.47% and the Dow at -0.38%. The Russell 2000 lagged again, shedding 0.95% as small caps continue to struggle under macro uncertainty. The Magnificent Seven posted a broadly red day, with only Nvidia, Netflix, and Apple closing in the green. Apple gained 1.81%, helping stabilize the tape, while Tesla’s 4% drop weighed heavily on sentiment. With earnings and inflation data on deck, indices are likely to remain volatile into month-end.

Notable Stock Movements

Intel surged nearly 10% after reports surfaced that the company is seeking a strategic investment from Apple to deepen collaboration. While analysts are skeptical about any near-term foundry deal, the market reacted positively to the potential for closer ties. Apple rallied 1.81%, while Nvidia and Netflix also advanced. On the downside, Tesla dropped over 4%, leading tech declines, and Oracle continued its recent slide. Costco was in focus after the bell, with expectations of strong consumer demand driving interest. Stock-specific moves are increasingly diverging, with rotation and selectivity taking center stage.

Commodity and Cryptocurrency Updates

Crude oil rose 0.48% to settle at $65.30, continuing its slow grind higher even as our model maintains a year-end forecast closer to $60. Gold added 0.32% to close at $3,780, regaining some ground ahead of Friday’s inflation data. Bitcoin dropped 3.71% to close above $109,300, marking a third consecutive decline and raising caution flags. Crypto appears increasingly sensitive to liquidity shifts, and the break below $110,000 suggests risk sentiment is weakening across markets.

Treasury Yield Information

The 10-year Treasury yield rose 0.63% to close at 4.174%, inching higher but still comfortably below the danger zones that would significantly weigh on equities. While the yield remains elevated, the market is not yet pricing in the kind of inflation shock that would push rates toward the 4.8% to 5.2% levels historically associated with broader market corrections. Traders are now laser-focused on Friday’s PCE release, which could be the catalyst that determines whether yields continue rising or begin to stabilize.

Previous Day’s Forecast Analysis

Wednesday’s model projected a SPY trading range between $655.75 and $666.25, favoring long setups above $660 and short setups below. Resistance levels were at $662 and $665, while support sat at $655 and $650. The premarket roadmap called for two-way action with a downward lean, noting that a loss of $660 would tip the balance in favor of bears.

Market Performance vs. Forecast

Thursday’s price action aligned perfectly with the model. SPY opened just below $658, tested a high of $659.41, and then sold off to a low of $654.41 before closing at $657.97. The support at $655 was tested twice and held, while rejection below $660 confirmed the bear control flagged in the roadmap. The action validated both model levels and directional bias.

Premarket Analysis Summary

Thursday’s premarket report, published at 7:37 AM, set the bias level at $662.40 and warned that weakness beneath that level would favor short entries. The roadmap listed upside targets at $660, $662.40, $664, and $665.40, and downside targets at $657.50 and $656. The report highlighted bearish control below $662.40, with a potential snapback rally if lower levels held. It also acknowledged macro catalysts as likely drivers of intraday direction.

Validation of the Analysis

SPY traded beneath the bias level all session, confirming the forecast for bearish control. Both $657.50 and $655 were tested, and buyers showed up right on cue. While the roadmap allowed for a snapback rally, the market lacked momentum to reclaim $660, and sellers maintained control. The roadmap and MSI levels aligned again to produce a high-confidence directional session.

Looking Ahead

Friday’s PCE inflation report will be the deciding factor in how the week ends. A cooler print may revive hopes for rate cuts and fuel a rally, while a hotter number could spark a deeper correction. With three consecutive red days, bulls are now on the defensive. Key levels like $655 and $650 remain vital, while reclaiming $663 would reset the uptrend. Traders should expect volatility and be ready for either direction depending on the macro data.

Market Sentiment and Key Levels

SPY closed at $657.97, just below the critical $660 pivot, signaling continued short-term pressure. Resistance is now at $660, $662, $665, and $668. Support lies at $655, $650, and $645. Bulls must reclaim $660 quickly to stop the bleeding, while bears will look to force a break below $655 to open up lower targets. The market remains above the longer-term bull trendline, but the uptrend is under pressure.

Expected Price Action

Our model projects SPY to trade between $653 and $664 on Friday. Resistance is layered at $660, $662, $665, and $668. Support sits at $655, $650, and $645. The Put side remains dominant, and volume confirms increased activity. The PCE report is expected to drive direction. A strong inflation number could break $655, sending SPY to $650 or lower. A soft print may push SPY back toward $663 and reopen the path to new highs.

Trading Strategy

Long setups are viable only above $660 or on strong dip buying at $655. Shorts remain favored below $660 or on failed breakouts near resistance. The VIX rose 3.46% to 16.74 and may rise further if Friday’s data disappoints. Bulls should not blindly buy dips; instead, trade both support and resistance and reduce risk into the event. The trend has weakened, and the market is now data-dependent. Stay nimble, take quick profits, and avoid overnight exposure.

Model’s Projected Range

SPY’s projected range for Friday sits between $652.75 and $665, with the Put side dominating in an expanding band that suggests trending price action interlaced with periods of chop. PCE is due tomorrow and has the potential to move the market, particularly following a strong GDP print that may give the Federal Reserve reason to pause further rate cuts. The market continues to react to macro headlines, and with a potential government shutdown next week, external risks to the broader rally should not be ignored. Today’s decline was another mild pullback to major support at $655, which was bought twice, limiting SPY’s loss to just 46 basis points on strong volume. This marked the third day of selling, yet dips at key levels continue to attract buyers. That said, the bears now control the near term, with higher-than-average volume reinforcing profit-taking and positioning shifts. Overnight, the market moved lower and accelerated in the early hours, leaving SPY below the $660 level we flagged yesterday as the bulls’ failure point. While $655 did come into play, strong buying emerged on both tests of this level. A third test, however, is likely to fail, so caution is warranted until bulls can recover and hold above $660. With SPY sitting just below $660, prices could swing either way. PCE, the Fed’s preferred inflation gauge, will be the catalyst: a hot number likely pushes prices lower. With SPY still well above the critical $645 threshold, and with dips consistently bought, bulls remain in the game but control of the market is no longer as clear cut. To reclaim the narrative, bulls need a move above $663, which would open the door to new all-time highs. If $655 fails, another leg lower to $650 or below becomes likely. A decisive break of $640 would mark “lights out” for the bulls and trigger our base case of a 10–15% pullback this year. We are no longer blindly buying weakness; instead, we are trading both support and resistance. For Friday, resistance is at $660, $662, $665, and $668, while support is at $655, $650, and $645. Both $660 and $655 remain the pivotal battlegrounds. Since reclaiming $585, SPY has held a steady uptrend fueled by dip buyers, but that trend is now broken. Mag stocks were mixed today, with Apple, Nvidia, and Netflix rallying while the rest slipped. ETH broke below $4000, warning of the recent decline. We have long highlighted ETH below $4300 as a leading indicator of weakness. If ETH holds below that level for several sessions or if consistent weakness emerges in Mag leaders, the market is likely to fall. We continue to favor quick profit-taking and caution with overnight holds. The VIX rose 3.46% to 16.74 and may climb further. If you haven’t added protection to your long book, now is the time. VIX below 23 supports the bullish case, but a breakout above it could finally trigger the long-anticipated pullback. SPY closed just below the lower bull trend channel from the April lows, a level we will watch closely to determine whether the uptrend remains intact or if a new bear trend is emerging.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the day in a wide Ranging Market State, with SPY closing just above MSI support. Extended targets printed for much of the overnight and day session indicating the herd was participating in today’s decline. But once these extended targets stopped printing, the bulls were able to hold $655 and recover much the day’s losses. The MSI rescaled lower overnight several times and while the range of the MSI was not extreme, combined with extended targets, it was clear price was moving to major support at $655. But twice dip buyers showed up once again pushing SPY back up toward $660 at the close, a level they need to reclaim to move prices higher. For Friday the MSI is implying a choppy conditions and it wouldn’t surprise us to see tests both higher and lower overnight into PCE. MSI support is $657.50 with resistance at $661.90.
Key Levels and Market Movements:
On Wednesday we wrote, “We expect the bulls to attempt a recovery once again, while the bears may try for another test of the day’s lows,” and noted, “The market continues to favor the bulls long term, but the bears hold the ball in the near term, and a stall at the day’s highs could set up a solid short opportunity,” while also stating, “The $663 level is now the line in the sand; bulls must reclaim it to regain full control, while a failure at $660 would likely lead to lower prices.” With that context, and with the MSI rescaling lower overnight with extended targets below, we looked to get short quickly or buy a test of a major level. At the open, with SPY hovering near $658, we considered a quick short into $655 with the MSI and extended targets signaling weakness, but no pattern emerged so we held off. That opportunity came at 9:45 am on a failed breakdown right at major support at $655. We entered long after extended targets stopped printing and set T1 at MSI resistance at $659. With T1 hit quickly, we exited on a failed breakout at 11:45 am and reversed short, knowing the market was still weak and shorts remained the higher-probability play. We entered at $659 with T1 at the premarket level of $657.50, which was reached early in the afternoon. We then set T2 at another premarket level of $656, and with extended targets printing again, we knew the second trade had strong momentum. With T2 secured, we trailed the final 10% with a stop at breakeven. Just after 2 pm, SPY printed another textbook failed breakdown at the day’s lows, so we exited the short and reversed long, setting T1 at MSI resistance at $657. T1 hit quickly, but with the MSI rescaling to a ranging state, we closed the third trade at the premarket level of $657.50 and moved into profit protection mode. Three for three, locking in major gains on the day, 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:
Friday has PCE which is likely to move the market. A hot inflation number will push prices lower to retest today’s lows and possibly break lower, while a cool reading will allow the bulls to reemerge and stop the current three-day slide. The market no longer simply favors the bulls. It is now a more balanced market with opportunities both long and short. The bears hold the ball as long as price remains below $663 and any failure at $655 will surely lead to a test of $650. But if the bulls can reclaim $663 they are back in the driver’s seat and prices will move higher. Expect more two-way trading, looking to buy dips at major support or short on weakness at or near $663 or on a failed breakout. The bears will come to life in scale on a drop below $640. We are no longer blindly buying 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 $665 to $680 and higher strike Calls while buying $659-$664 Calls implying the Dealers belief that prices may recover on Friday and as such, they wish to participate in any rally. The ceiling for tomorrow appears to be $667. To the downside, Dealers are buying $658 to $600 and lower strike Puts in a 2:1 ratio to the Calls they’re selling/buying displaying little concern that prices could move lower tomorrow. Dealer positioning is changed from slightly bearish/neutral to slightly bullish/neutral.
Looking Ahead to Next Friday:
Dealers are selling SPY $662 to $690 and higher strike Calls while also buying $659 to $661 Calls implying the Dealers belief that prices will recover next week. The ceiling for the week appears to be $672. To the downside, Dealers are buying $658 to $540 and lower strike Puts in a 3:1 ratio to the Calls they’re selling, reflecting a bearish to 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

SPY closed at $657.97 after three straight red sessions and sits just below the $660 pivot. Bulls must reclaim $660 and $663 to regain control, while a breakdown below $655 opens the door to $650. Friday’s PCE report is the key catalyst. Trade level to level, reduce risk, and use MSI and model guidance for precision. The trend remains intact for now, but pressure is building.

Good luck and good trading!