Market Insights: Thursday, October 16th, 2025
Market Overview
Markets pulled back on Thursday as traders reacted to deepening regional bank concerns, soft credit conditions, and continued geopolitical pressure. The S&P 500 dropped 0.67%, while the Dow tumbled 0.65%, or just over 300 points. The Nasdaq shed 0.47%, erasing earlier gains despite strength in AI-linked names like Nvidia and Broadcom. A surge in gold and a drop in Treasury yields signaled heightened risk aversion heading into the weekend. The session began with promise as chipmakers climbed on strong earnings from TSMC, which posted a record 40% quarterly profit gain and raised its 2025 revenue forecast for the second time this year. This lifted Nvidia, Apple, and other AI-related names early before broader market weakness took over.
Pressure mounted midday as Zions Bancorp and Western Alliance warned of new loan losses, rekindling fears around regional bank credit quality. These headlines quickly flipped investor sentiment, with Financials leading the downside. Comments from President Trump reaffirmed elevated tensions with China, telling reporters, “you’re in one now” when asked about the prospect of a prolonged trade war. However, Treasury Secretary Scott Bessent offered a small reprieve, hinting at a possible tariff pause extension. Meanwhile, the government shutdown entered its third week, continuing to withhold vital economic data from both the Fed and the markets. The 10-year Treasury yield slid to 3.971%, reflecting recession fears, while gold soared above $4,300, hitting yet another record. The volatile, indecisive tone remains intact as traders brace for OPEX and more earnings next week.
SPY Performance
SPY opened at $666.81 and tested both sides of the range, climbing to $668.71 before selling off sharply to $657.11. It ultimately closed at $660.69, down 0.67%, on volume of 102.15 million, well above average and reflective of institutional repositioning. The session was marked by a failed upside push and a strong rejection from overhead resistance. The close below $663 and inability to hold above $666 marked a shift in control back toward the bears, though bulls managed to defend key support at $657. SPY continues to chop between $658 and $670 with $664 now emerging as the new battleground.
Major Indices Performance
All major indices closed lower on Thursday, with the Dow falling 0.65%, the S&P 500 down 0.67%, and the Nasdaq off 0.47%. The Russell 2000 bucked the trend, climbing 0.89% in another sign of small-cap divergence. Pressure in Financials and continued softness in leadership stocks weighed heavily, and the absence of fresh macro data left investors looking to corporate results and positioning as the primary catalysts.
Notable Stock Movements
The Magnificent Seven were mostly red on Thursday, with only Alphabet and Nvidia closing green. Nvidia rose 1.12% on strength in semiconductors following TSMC’s bullish earnings, while Alphabet inched up 0.17%. Amazon, Apple, Tesla, Meta, and Microsoft all declined. The broader tech space failed to hold early gains, reflecting continued fragility under the surface. Regional banks sold off sharply after Zions and Western Alliance reported loan issues. Crypto-related names tracked Bitcoin lower, while gold miners outperformed as the precious metal surged to record highs.
Commodity and Cryptocurrency Updates
Crude oil fell 1.36% to $57.48, confirming a breakdown below the long-watched $60 level. Our model now sees a possible continuation toward $50. Gold exploded higher by 3.10% to $4,331, marking yet another record high as investors sought safety. Bitcoin dropped 2.68% to close just above $108,100, continuing a multi-day slide. Crypto’s weakness alongside equities signals broader derisking and growing caution.
Treasury Yield Information
The 10-year Treasury yield fell 1.85% to close at 3.971%, dipping below the psychologically important 4% threshold. The move reflects growing concern about economic slowing and credit quality. Yields below 4% offer near-term support to equities, but rising volatility suggests that risk appetite is fading quickly. With the Fed silent during the shutdown, markets are left to speculate, and any upside surprise in rates could rapidly shift sentiment.
Previous Day’s Forecast Analysis
Thursday’s model projected a SPY range of $656 to $674.75, with $664 as the dividing line. SPY opened at $666.81 and quickly tagged resistance at $668.71 before reversing hard to $657.11, validating the model’s forecast for a big up, big down session. The move below $664 confirmed that bears retained control, and the inability to reclaim that level during the afternoon rebound signaled continued vulnerability. Support held at $657, but price action remains fragile.
Market Performance vs. Forecast
SPY once again respected both ends of the projected range, moving from above $668 to just above $657 before settling at $660.69. The late-day recovery kept price above key support, but the persistent inability to close above $664 shows that the bulls are losing momentum. The roadmap correctly anticipated a rangebound day with whipsaw potential, and price action reflected continued indecision beneath the surface.
Premarket Analysis Summary
Friday’s 7:09 AM premarket note warned that price could melt upward if it held above the bias level of $667.80, with resistance at $669.80 and $672. That upside push stalled early and reversed after a failed breakout at $668.71. The note also warned of consolidation and potential targets at $663.30, $661.85, and $660.85 if price rejected bias. All of those levels were hit, confirming the forecast’s accuracy and offering multiple tactical opportunities.
Validation of the Analysis
The forecast highlighted that price would likely test both ends of the range, and that’s exactly what occurred. The early move toward $669 met resistance, and the sharp reversal tagged downside levels almost mechanically. SPY ultimately closed below bias but above major support, reflecting a choppy and confused market with little directional conviction. The model remains highly in sync with market behavior, giving traders actionable edges.
Looking Ahead
SPY’s projected maximum range for Friday is $647 to $672.25. The range has expanded as volatility rises into OPEX and macro tensions build. Key resistance sits at $662, $664, $667, and $670, while support lies at $658, $655, $652, and $650. A break below $650 opens the door to $640, where bulls must defend aggressively. With the VIX now over 25, stress is rising, and a break below $655 could lead to a redraw of the bull channel into a bear channel. Bulls still have control above $640, but the trend is weakening.
Market Sentiment and Key Levels
SPY closed at $660.69, below the new dividing line of $664, signaling that bears currently hold the advantage. A move above $664 would shift control back to bulls with targets at $667 and $670. Below $658, expect downside acceleration toward $650 and potentially $640. The structure remains choppy and headline-driven, and the VIX’s surge to 25.30 confirms that traders should brace for elevated volatility into next week. Crypto and tech softness are early warning signs of deeper potential weakness.
Expected Price Action
The model expects two-way action within the $654 to $669 range. Thursday’s close puts price at the lower end of the recent band, and unless bulls reclaim $664 early Friday, pressure will likely remain to the downside. A break of $657 could lead to a quick test of $652–$650. Bulls need a swift recovery to rebuild confidence. The broader trend remains tilted higher above $640, but the slope is weakening and the risk of a 10–15% correction is rising.
Trading Strategy
Friday’s session favors tactical plays with a fade-the-extremes mindset. Longs near $650 with stops below $648 are viable if bulls defend the lower edge of the range. Shorts near $667–$670 remain valid if resistance holds. Avoid the middle chop. Position sizes should be smaller given elevated volatility and OPEX risk. Focus on clean setups aligned with the model and MSI, and stay nimble with entries and exits.
Model’s Projected Range
SPY’s projected maximum range for Friday sits between $647 and $672.25, with the Put side dominating in an expanding band that suggests trending price action interlaced with periods of chop. There is no scheduled economic data, but with earnings season underway, the market is likely to react sharply to any major surprise from key corporate reports. Today was another big up, big down, big confusion session, with SPY testing both the prior day’s highs and lows, just as we warned might happen given the current market conditions when we said “expect more of the same until the market finally breaks out of its current range.” SPY closed down 0.68% at $660.64, once again below the critical $663 level that defines bull control, and the question remains whether the bottom is truly in or if the bulls still have work to do before ending the recent weakness. Looking ahead to Friday, which is also OPEX day, caution is warranted as there are two likely scenarios: first, the bulls may try to push SPY to $665 and then $670, or second, if today’s low at $657 fails, SPY could slide quickly, breaking through last Friday’s $653 low and potentially heading lower. These wide swings and sharp reversals are a sign of a market struggling to establish direction, with algorithms dominating and flipping positions quickly, creating traps for all but the most nimble traders, making this a time to reduce position size and focus on trading the range extremes rather than the middle where whipsaws are likely. The range still appears to be between $658 and $670, with $664 emerging as the new dividing line; above that, the bulls are likely to drive prices higher, while below it, SPY could move toward recent or even deeper lows. Should the market break last Friday’s lows, $640 becomes the next key level where the bulls must make a decisive stand to avoid a formal transition into a bear market. Although the bulls didn’t aggressively buy the dip today, they did manage to hold price above $658, and with SPY still above the $640 “line in the sand,” the bulls remain in the fight though they are clearly losing momentum. It remains likely that SPY will test lower levels again before breaking out of this range, so expect two-way trading on Friday that favors fading the edges, with the bears holding a slight advantage heading into the session. Macro risks remain high with the ongoing government shutdown and renewed tariff tensions, so trade the market you see rather than the one you expect, and as we’ve emphasized for weeks, until persistent weakness develops in key market leaders, the broader trend remains tilted higher. For Friday, resistance sits at $662, $664, $667, and $670, with support at $658, $655, $652, and $650; above $670 lies a thick wall of resistance likely to cap gains, while below $650 there is little structural support until $640. Since reclaiming $585, SPY has maintained a broad uptrend fueled by dip buyers despite recent turbulence, but that trend is weakening. Crypto and most Mag stocks declined today, an early warning sign that should not be ignored, as continued weakness in these leaders could trigger the 10–15% correction we’ve been forecasting into year-end. While the bulls still technically hold the broader advantage, they have opened the door for the bears, and if SPY falls to $640, it will be decision time on whether the bull market’s run is over. The VIX surged 22.58% to 25.30, signaling heightened market stress; VIX below 23 supports the bullish case, but a sustained breakout above that level could finally trigger the long-anticipated correction, though a move toward 30 may represent a fade point and potential short-term exhaustion in volatility. SPY closed at the lower end of the redrawn bull trend channel from the April lows, which has now been redrawn three times, reflecting a weakening bullish structure, and a break and close below the lower trend line near $655 would likely force the model to redraw the trend as a bear channel, signaling a formal shift in market structure.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended the day in a Ranging Market State, with SPY closing on MSI support. There were extended targets above in the premarket and the morning session as well as in the afternoon session below. By the late afternoon these had stopped printing and SPY rebounded slightly, rescaling the MSI to its current ranging state from a bearish state. Overnight the MSI rescaled higher and printed extended targets above which saw SPY rally to $669 after the open. But like yesterday, the rally didn’t last long as SPY sold off and the MSI rescaled lower several times while printing extended targets. For tomorrow with the MSI in a ranging state, the MSI is forecasting more confusion and two-way trading, with the potential for a retest of today’s day’s lows. MSI support is $660.14 with resistance at $664.96.
Key Levels and Market Movements:
On Thursday we wrote, “markets remain on edge following recent tariff and China headlines,” and noted, “the bulls have regained control, but only marginally,” while also stating, “Overnight, the bulls want to defend $660, and if that level holds, the market is likely to test the day’s highs near $670. Should $660 fail, support at $658 and possibly $654 comes into play.” With this context, and with the MSI rescaling higher overnight with extended targets above, we looked for an early long entry to test the prior day’s high. We got that opportunity at 10:10 off MSI support with a long at $665.75 and T1 at the premarket report level of $667.80. With T1 in hand, we set T2 at $669.80, another premarket level. SPY didn’t reach our second target and instead set up a textbook failed breakout, so we exited our long at $668.25 and reversed short, setting T1 at MSI support at $667.25. A quick hit at this level and we set T2 at lower MSI support at $665.30. Another target hit, and we were in great shape before noon with two winning trades. We had little to do but trail our remaining position to see how far SPY would fall. After all, we forecasted a test of both sides of the range and hoped for a move toward the prior day’s low at $660, which was also a premarket level. Sure enough, the MSI rescaled lower, and SPY reached $660, setting up a textbook failed breakdown. We exited our runner and reversed long off this level after noon, setting T1 at MSI resistance at $661.60. Another target hit, and we looked for a good spot for T2, choosing the premarket level of $663.30, which was hit shortly after. With both targets achieved, we moved our stop to breakeven to see if SPY might once again retest the day’s highs. That didn’t happen. Instead, SPY reversed quickly, falling back to $660 and stopping us out of our runner at breakeven. At that point, while the market looked ready to fall further and the MSI continued generating setups, we decided to enter profit protection mode since we were three for three with massive gains on the day, thanks once again 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 no scheduled economic news but it is OPEX, which is likely to add to this week’s volatility. With VIX above 25, market moves are expected to be exaggerated. Markets remain on edge following recent tariff and China headlines along with other macro risks, making it essential to trade what you see. With a close below $663, the bulls have once again let the bears in the building, giving them a slight advantage heading into Friday. With the MSI in a ranging state, the market will likely test both sides of the wide range as it seeks direction, and any external catalyst could quickly shift sentiment. As such, remain flexible and monitor the MSI closely for directional cues. The projected range for Friday is wide, so aligning with the MSI trend and staying with it remains the best approach to capture gains. Failed breakouts and failed breakdowns continue to offer the highest-probability setups in this environment. Overnight, the bulls want to defend $658, and if that level holds, the market is likely to test the day’s highs near $669. Should $658 fail, $654 comes into play, with $640 serving as the critical line that must hold to preserve the broader bull trend. A break above $669 would likely lead to new all-time highs, although we view this as a low-probability event for Friday. The bears only gain full control on a decisive drop below $640. As always, trading failed moves remains one of the most reliable setups in this type of market. 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 $669 to $690 and higher strike Calls while also buying $661 to $668 Calls indicating the Dealers’ desire to participate in any rally on Friday. The ceiling for tomorrow appears to be $670. To the downside, Dealers are buying $660 to $600 and lower strike Puts in a 4:1 ratio to the Calls they’re selling/buying displaying some concern that prices could move lower tomorrow. Dealer positioning is unchanged from bearish to bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $661 to $690 and higher strike Calls while also buying $667 and $670 Calls indicating the Dealers’ desire to participate in any relief rally next week. The ceiling for the week appears to be $675, which looks extremely difficult to overcome. To the downside, Dealers are buying $660 to $540 and lower strike Puts in a 5:1 ratio to the Calls they’re selling/buying, reflecting a bearish outlook for the week. 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 is still in a wide, volatile range. With Thursday’s close below $664, bears have the edge, but the bulls haven’t lost control completely. Fade extremes and avoid mid-range noise. Macro risks and OPEX positioning will dominate. Use MSI, respect the roadmap, and keep your playbook tight. The market will reward precision, not prediction.
Good luck and good trading!
