Market Insights: Friday, September 26th, 2025

Market Overview

US stocks climbed Friday, ending a three-day losing streak after the Federal Reserve’s preferred inflation gauge, the PCE index, came in line with expectations, easing immediate fears of a rate shock. The S&P 500 rose 0.57%, the Nasdaq added 0.44%, and the Dow gained 0.65%. Despite Friday’s relief rally, all three major indices closed the week slightly lower, with the Nasdaq and S&P 500 snapping three-week winning streaks. The underlying tone remained cautious, as investors digested fresh macro risk and shifting sentiment around policy, trade, and corporate earnings.

August’s PCE report showed core prices rising 2.9% year-over-year and 0.2% month-over-month; both figures matching expectations and signaling that inflation, while still elevated, isn’t accelerating further. That provided breathing room for bulls, though core inflation remains stubbornly above the Fed’s 2% target. Markets also reacted to the University of Michigan’s consumer sentiment survey, which revealed a larger-than-expected drop in confidence, highlighting concern over economic uncertainty as recessionary risks persist.

The political backdrop added another layer of tension. Former President Trump proposed sweeping new tariffs, including a 100% levy on imported branded drugs not manufactured in the US and new duties on heavy trucks and certain furniture categories, effective October 1. Pharma stocks overseas dropped on the news, while Wall Street remained cautious over the lack of clarity. In addition, Trump signed an executive order greenlighting the $14 billion spin-off of TikTok’s US operations from ByteDance. The deal, well below TikTok’s estimated $40 billion valuation, raised eyebrows and could face hurdles from Beijing.

The rally was led by broad-based gains across major sectors, though Big Tech was mixed. Nvidia and Tesla closed out the week higher, while Amazon fell over 4% for the week and Meta and Alphabet also posted declines. Microsoft dipped slightly, and Apple slipped again on Friday, extending its short-term underperformance. With concerns around AI sustainability, sticky inflation, and the looming threat of a government shutdown, sentiment remains fragile heading into quarter-end.

SPY Performance

SPY rose 0.56% to close at $661.82 after opening at $659.51 and trading between $657.89 and $662.37. Volume was average at 61.96 million shares. The session began with weakness but reversed midday after inflation data met expectations. Buyers reclaimed the $660 pivot and pushed SPY into the close, snapping a three-day slide. Despite the positive close, price remains trapped below key resistance at $663, and while support held, bulls still have work to do to fully reclaim control.

Major Indices Performance

The Dow led the advance, gaining 0.65%, followed by the S&P 500 at +0.57% and the Nasdaq at +0.44%. The Russell 2000 also joined the rally, rising 0.83% and showing strength after a week of lagging. Among the Magnificent Seven, Meta and Apple declined, while the rest of the group finished higher, with Tesla and Nvidia seeing the strongest gains. Friday’s bounce helped ease the week’s losses, but momentum remains cautious as macro clouds linger.

Notable Stock Movements

Tesla and Nvidia led Big Tech higher, helping reverse some of the week’s broader losses. Intel’s rally cooled, but the stock held onto most of Thursday’s gains after speculation about deeper ties with Apple. Meta dropped 0.71%, while Apple fell 0.58%, continuing recent weakness. Amazon was the biggest weekly loser among the Mag Seven, down more than 4% over five sessions. Traders are now rotating selectively within tech, and attention is turning to defensive sectors and energy as earnings season approaches.

Commodity and Cryptocurrency Updates

Crude oil rose 0.51% to settle at $65.31, continuing its gradual climb. Our model still expects a retreat to $60 before year-end. Gold gained 0.63% to close at $3,794, finding support as inflation readings stabilized. Bitcoin edged up just 0.03% to close above $119,100, marking a pause in its recent slide. Despite a weak start to the week, crypto sentiment appears to be firming slightly, though volatility remains elevated.

Treasury Yield Information

The 10-year Treasury yield rose 0.24% to close at 4.184%. While still beneath the 4.5% warning zone for equities, yields remain persistently high, pressuring valuations. A move above 4.8% would likely trigger a broader equity correction, and above 5% could result in a 20% drawdown or more. With inflation sticky and the Fed maintaining a cautious tone, yield movement remains a critical market catalyst.

Previous Day’s Forecast Analysis

Thursday’s forecast projected a range between $652.75 and $665, highlighting $660 as the key pivot with downside levels at $655 and $650. The model favored short setups under $660, but allowed for bullish continuation if $660 was reclaimed. Friday’s roadmap emphasized volatility tied to PCE and warned that bulls needed a close above $660 to regain the upper hand.

Market Performance vs. Forecast

Friday’s action tracked the model’s expectations well. SPY opened at $659.51, dipped to $657.89 following early volatility, then reclaimed the $660 pivot and extended to $662.37. The late-session strength and close at $661.82 confirmed the bullish roadmap. Support at $658 held early, and resistance near $662 was tested into the close. The session played out as a textbook recovery, consistent with the model’s outline.

Premarket Analysis Summary

Friday’s premarket report, released at 6:54 AM, identified $659.40 as the bias level, with upside targets at $660.40 and $662.35. Downside levels were at $657.40 and $654.90. The roadmap favored a rally if $659.40 held and anticipated a reversal of the week’s decline if buyers captured control early. The note highlighted that the market remained range-bound, but that post-PCE action could trigger a breakout in either direction.

Validation of the Analysis

The report’s roadmap proved accurate as SPY tested the bias level off the open, then broke above it by mid-morning. The targets at $660.40 and $662.35 were both hit in succession, validating the bullish bias. The session avoided the lower targets and confirmed the importance of the $659–$660 zone as a pivot for directional control. With PCE risk resolved, the model maintained its edge with clean levels and a balanced directional read.

Looking Ahead

Monday has no scheduled economic releases, giving the market room to digest the week’s data and brace for a heavy calendar ahead. With quarter-end approaching and a potential government shutdown looming, volatility is likely. Bulls must reclaim $663 to signal continuation, while a breakdown below $655 would invite deeper selling. Friday’s rally was encouraging, but with mixed breadth and average volume, confirmation is still needed.

Market Sentiment and Key Levels

SPY closed at $661.82, just above the $660 pivot but still below key resistance at $663. Resistance sits at $663, $665, $670, and $672. Support lies at $659, $657, $655, and $650. The bulls remain in the game above $655, but a break of that level opens the door to $650. The $663–$665 zone remains the key ceiling for momentum to resume, while the $650–$657 area is strong support. Below $650, risk rises significantly.

Expected Price Action

SPY’s projected range for Monday is between $657 and $665, with the Call side dominating and suggesting trending price action with intermittent chop. While PCE was in line, inflation remains elevated at 3%, keeping Fed uncertainty alive. Quarter-end flows and shutdown headlines could create volatility. Bulls must press through $663 to resume the rally, while bears will need to crack $655 to regain momentum. Absent catalysts, consolidation may dominate early in the week.

Trading Strategy

Longs are favored above $660 and on dips to $657 or $655, with upside targets at $663, $665, and $670. Shorts remain viable on failed moves near $665 or if $655 breaks. The VIX fell sharply by 8.66% to 15.29, a large drop for a moderate SPY rally, suggesting futures traders are pricing in calmer conditions, or preparing for a volatility spike. We remain cautious and prefer tactical trading with tight stops. Avoid chasing breakouts and trade both support and resistance levels with discipline.

Model’s Projected Range

SPY’s projected range for Monday sits between $655.75 and $667, with the Call side dominating in a steady band that suggests trending price action interlaced with periods of chop. There is no news due on Monday, and while PCE was in line with expectations, inflation remains stubborn at 3% above the Fed’s 2% target. The market initially moved higher on PCE but sold off to major support at $658 before rallying into the close, reversing a three-day slide to finish up 57 basis points at $661.82. The potential government shutdown next week and quarter-end repositioning could set up volatility, but today’s rally shows buyers remain present, even though volume was just average and did not strongly reinforce the move. Overnight the market drifted sideways until PCE was released, and by the open, bulls had pushed SPY above $660 to reclaim control, while bears tried but failed to break $660, only reaching $658 before buyers stepped in to reverse the slide. With SPY just above $660, prices are wavering between higher or lower, yet with the index well above the critical $645 threshold and dips still consistently bought, bulls remain in the game even if market control is no longer clear cut. To reclaim the narrative, bulls need to push price above $663, which would open the door to new all-time highs, while bears need to force SPY below $655 to take back near-term control; if that level fails, the market likely drops to $650, and a decisive break of $640 would mark lights out for the bulls and trigger our base case of a 10–15% pullback this year. If bulls can reclaim $663, they will resume the driver’s seat and push the bears back into hibernation, but we are being cautious and no longer blindly buying weakness, instead trading both support and resistance. For Monday, resistance sits at $663, $665, $670, and $672, with support at $659, $657, $655, and $650, and very heavy resistance above $665 likely to limit gains, while the $650–$657 range is also dense with support, but below $650 there is little to hold the market up. Since reclaiming $585, SPY has held a steady uptrend fueled by dip buyers, but that trend has now broken for the second day. Mag stocks were mostly higher with only Meta and Apple declining, while ETH is hovering around $4000 which may be a warning of further weakness. We have long highlighted ETH below $4300 as a leading indicator of market softness, and if it holds below 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 fell 8.66% to 15.29, a massive drop for just a 57-basis-point rally, suggesting Futures traders may see something we do not, and surely, 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 very narrow Bullish Trending Market State, with SPY closing well above MSI resistance turned support. Extended targets printed for most of the afternoon session and into the close, as well as in the overnight and part of the morning session, indicating the herd was participating in today’s rally. The MSI rescaled lower briefly in the morning session but each rescale was extremely narrow and without any extended targets. As such the bears couldn’t move price below major support and dips were bought once again. An afternoon rescale to the current state with extended targets above and SPY pushed up to the day’s highs into the close. For Monday the MSI is implying a continuation of today’s rally but perhaps one that is limited which will stall below the $663 major level. MSI support is $659.28 and lower at $658.97.
Key Levels and Market Movements:
On Thursday we wrote, “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,” and noted, “The bears hold the ball as long as price remains below $663,” while also stating, “Expect more two-way trading, looking to buy dips at major support.” With that context, and with the MSI rescaling higher overnight with extended targets printing in the premarket, we wanted to get long to see if SPY could at least retest the PCE highs, and that came right out of the gate on a textbook failed breakdown at MSI support at $659.30, where we went long and set T1 at the premarket level of $660.40. With T1 secured quickly, we set T2 at another premarket level at $662.35, and when price popped to that level we were in great shape, but a textbook failed breakout had us worried this could be the top so we closed our trailer at $661.75 and waited for extended targets to stop printing so we could go short; that didn’t happen soon enough, so we passed on the short and waited for another setup. The market dipped to $658 and set up a less than perfect failed breakdown, but we decided a long was worth the risk, so we entered at $658.35 with a tight stop and set T1 at MSI resistance at $659.30, and with T1 in hand we set T2 at the next premarket level, but price decided to come back and retest the lows of the day once again; we thought we might end up losing on this long but held with a stop below the lows, and price got close to our stop but again the dip at $658 was being bought so we reloaded to full size, set T1 once again at $659.30, then another target and T2 at the premarket level of $660.40. Another pullback followed, though not as deep, so we moved into profit protection mode with a stop at breakeven, and fortunately our stop was not hit and T2 was finally reached, leaving us little to do but trail. As soon as extended targets started printing, we knew we were in the clear, and with the day’s highs just out of reach we decided to close our trade at the end of the day, going three for three for a massive Friday payday and another week without any losing trades, 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 news and today’s PCE was the catalyst for the rally, and while the market still skews to the bulls they are no longer in complete control as it is now a more balanced market with opportunities both long and short. The bears hold the ball in the near term as long as price remains below $663, and any failure at $655 will surely lead to a test of $650. 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, with the bears coming 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 $664 to $680 and higher strike Calls while buying $662-$664 and $666 Calls implying the Dealers belief that prices may continue higher on Monday and as such, they wish to participate in any rally. The ceiling for Monday appears to be $667. To the downside, Dealers are buying $661 to $600 and lower strike Puts in a 3:1 ratio to the Calls they’re selling/buying displaying little concern that prices could move lower on Monday. Dealer positioning is changed from slightly bullish/neutral to slightly bearish/neutral.
Looking Ahead to Next Friday:
Dealers are selling SPY $664 to $690 and higher strike Calls while also buying $662 to $663 Calls implying the Dealers belief that prices will continue to recover next week. The ceiling for the week appears to be $672. To the downside, Dealers are buying $661 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 is unchanged from slightly bearish/neutral 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 $661.82 and reclaimed the $660 pivot, ending a three-day slide. Bulls must push through $663 to resume control, while a break below $655 shifts momentum back to the bears. With no data Monday, expect a technical session focused on positioning and support/resistance. Trade level to level, respect MSI signals, and tighten risk into quarter-end.

Good luck and good trading!