Market Insights: Wednesday, October 21st, 2026
Market Overview
Stocks rallied on Wednesday as SpaceX's quarterly results reignited enthusiasm for the AI tech trade. The Dow rose 0.7%, the S&P 500 gained almost 0.6%, and the Nasdaq climbed 1% with chipmakers leading the charge, a solid bounce after the prior session's mixed finish. SpaceX surged nearly 8% after reporting, and Elon Musk added fuel by revealing that SpaceX and Tesla have each formed special committees to discuss a potential merger. Tesla and Meta report after Wednesday's close, officially kicking off Big Tech's earnings season. The AI buzz could get even louder soon, since Anthropic may file its S-1 as soon as Friday, according to people familiar with the plans, setting up what could be the largest IPO in history. Oil climbed too, with Brent hitting $110 a barrel after an attack on a Saudi Arabian oil field amid ongoing Middle East tensions, while WTI traded near $98.
Cybersecurity stocks got a jolt after PHP released emergency patches Wednesday for two critical flaws, dubbed PHP2Shell, in code that runs about 70% of the world's websites. The bugs could let attackers take over any server running PHP 5.4 or later. Details leaked a day early, and Cloudflare logged attacks before the fix went out, so the group was already climbing before the patch arrived. CrowdStrike, Zscaler, and Okta got an extra boost after being named partners on Nvidia's new AI-agent security platform that morning. Zscaler, Okta, Cloudflare, and CrowdStrike jumped 5% to 7%, roughly three to five times their typical daily moves over the past month, with Okta, Cloudflare, and CrowdStrike each on track for their biggest gain since September. SentinelOne and Tenable rose 3% to 4%, and the HACK and CIBR cybersecurity ETFs each gained about 2%, outpacing the broader IGV software ETF. Not everyone joined the party, though. Palo Alto Networks and Fortinet were up only 1% to 2%, and Varonis was flat, so the real test is whether the gains hold Thursday once the patch is widely in place. Netflix went the other way, sliding between 4% and 5% after its fourth-quarter revenue forecast missed estimates and the company lowered its 2026 ad revenue guidance. The drop was more than three times its typical daily swing, and the stock was on track for its lowest close since August 2024, about 51% below its June 2025 record close. Wall Street is now paying less than half as much for a business that still expects double-digit revenue growth next quarter, just not as much as analysts wanted, and they trimmed their price targets anyway, as Ines Ferre reported. On the chart, $60 is the next stop down, where the stock bottomed in August 2024. Bulls want a close back above $67 in the next few days, which would turn Wednesday's breakdown into a potential bear trap that catches late sellers off guard.
SPY Performance
SPY opened at $771.17, gapping up above yesterday's close of $769.32 and starting the session right in the middle of the range we've been watching. The early pullback was shallow. Sellers pushed SPY down to a session low of $768.40, but that dip never came close to testing the $766.71 support level we flagged, and buyers stepped back in without much hesitation. From there, SPY climbed straight into the $772.87 to $773.24 ceiling that had capped three straight sessions, and this time it pushed through. SPY tagged a session high of $774.43, the first real breach of that zone. The breakout didn't fully hold into the bell, though. SPY slipped back and finished at $773.17, which lands right inside the $772.87 to $773.24 ceiling instead of cleanly above it.
SPY gained 0.54%, and for the second straight day it closed above its open, which means buyers kept doing the work during regular trading on top of the overnight gap. That's a good sign. The shallow morning dip was another one, because it shows buyers aren't waiting for deep pullbacks to get involved. But the volume problem just got worse. Only 28.84 million shares changed hands, below average and lighter than yesterday's already thin turnout. That makes three straight up days on shrinking participation, and a breakout attempt on the lightest volume of the stretch is exactly the kind of move that deserves some skepticism. The VIX dropped 3.76% to close at 16.66, extending its slide and sitting comfortably below the 20 mark. Fear keeps draining out of the market, and demand for protection keeps fading. That supports the grind higher, but a VIX this calm on fading volume also raises the risk that traders are getting comfortable before the breakout has been confirmed. The key question now is whether today's poke above the ceiling was the start of something bigger or just a probe that ran out of steam. SPY closed inside the $772.87 to $773.24 zone, not above it, so the line in the sand hasn't officially been crossed yet. A close above $773.24, ideally on stronger volume, would finally confirm the breakout and put $775.95 to $776.30 next in line. Today's high of $774.43 is the first marker on the way there. On the downside, $772.87 is now the first level to watch, and slipping back below it would turn today's breakout attempt into another rejection. Below that, yesterday's close of $769.32 and today's low of $768.40 form a support pocket, with $766.71 as the more important floor after that. A close below $766.71 would put $764.44 back in play. Today the bulls finally cracked the ceiling that had stopped them three times, which counts as real progress. Until they can close above it with conviction and real volume behind them, though, this move is still a test rather than a verdict.
Major Indices Performance
The Nasdaq took the lead, climbing 1.05% as tech roared back after stalling out in the prior session. Yesterday's breather turned out to be just that, and buyers stepped right back into growth names with renewed confidence. The rotation trade flipped once again, with money flowing back toward the big tech names that had been left behind as small-caps grabbed the spotlight. Leadership wasn't perfectly unanimous across the group, but the strength was broad enough to push the index to the front of the pack. It's another reminder that investors aren't ready to abandon tech, and they're still willing to buy dips in the market's heaviest hitters.
The Dow finished second with a solid 0.69% gain, building on its strong showing from the prior session. Blue chips kept their momentum going, with industrials, financials, and other cyclical names continuing to attract steady buying. Back-to-back gains for the old-economy crowd suggest the recent confidence in the broader economy isn't fading anytime soon. The Dow didn't match yesterday's pace, but holding onto gains and adding more on top of them is exactly what bulls want to see. That kind of follow-through points to a market with a sturdier foundation than one riding on a single sector.
The Russell 2000 brought up the rear but still managed a 0.32% gain after leading the charge in the prior session. Small-caps cooled off as money rotated back toward tech, but they didn't give back any of their big move, which is a quiet win in its own right. Holding steady after a breakout day shows buyers aren't rushing for the exits in the riskiest corner of the market. The S&P 500 landed in between with a modest gain, helped along by its heavy tech weighting. The VIX dropped 3.76% to close at 16.66, sliding further below 20 and confirming that fear keeps draining out of the market as all three indices finished in the green.
Notable Stock Movements
Tesla was the biggest mover in the Magnificent Seven, and this time it led the charge higher. The stock jumped 3.41% to top the group, building on last session's solid gain and showing that buyers aren't done chasing it. Two strong days in a row from Tesla says this is more than a quick bounce, and traders are clearly leaning back into the higher-beta growth names. When the most volatile mega-cap starts pulling the rest of the group along, it usually signals that risk appetite is coming back in a meaningful way. If Tesla can hold these gains, it could stay the go-to momentum play in big tech.
The group as a whole flipped back to a mostly green session, erasing much of the weakness that weighed on it last time. Amazon and Alphabet were the only names to finish in the red, with Alphabet leading the decline after sliding 1.62%. Amazon's dip is worth watching because it snaps the follow-through buyers had been showing, though one red day isn't enough to call the trend broken. Meta finally found its footing and joined the winners, which removes a big drag on the group after several rough sessions. Five gainers out of seven tells you leadership in big tech is back on track, and the rotation away from growth that showed up last session didn't stick around.
The broader market confirms that money flowed right back into tech. The Nasdaq led the way with a 1.05% gain, while the Dow climbed 0.69% and the Russell 2000 added a more modest 0.32%. That's a reversal from last session's small-cap leadership, but the important part is that all three indexes finished higher, which shows the rally has both depth and big tech muscle behind it. The VIX dropped 3.76% to 16.66, pushing fear even further below the key 20 level and showing traders are comfortable adding risk. Thursday brings Unemployment Claims at 8:30 AM ET, which is unlikely to move the market, so these names will keep trading on momentum and positioning. If Tesla keeps running and Alphabet stabilizes, the Nasdaq could keep driving the market higher. But if the weakness in Alphabet and Amazon spreads, the tech-heavy index could lose steam just as it was getting back in gear.
Commodity and Cryptocurrency Updates
Crude oil kept sliding, dropping 4.15% to close at $97.57. That's now three straight sessions of selling, and the $100 level is slipping further into the rearview mirror. Even so, crude has rallied well above $70 and far beyond longer-term model expectations, and the geopolitical tensions and supply disruptions that fueled the surge haven't gone away. This pullback looks more like traders taking profits and unwinding some of the fear premium than a real shift in the underlying story. Thursday's calendar only offers Unemployment Claims, which isn't likely to stir the oil market, so headlines will stay in the driver's seat. The bigger worry hasn't changed: if crude holds at these elevated levels, persistent energy costs will keep adding to inflationary pressure and could seriously complicate the Fed's path on rate policy.
Gold snapped its losing streak, edging up 0.18% to close at $4,150. After two days of matching declines, the metal found its footing even as risk appetite stayed strong across the market. That's a quietly bullish sign, because gold held firm without needing a wave of fear to drive buyers back in. The move was small and steady, with no frantic chasing, and that kind of calm strength usually reflects patient, long-term demand. Inflation uncertainty, consistent central bank buying, and a steady stream of geopolitical headlines continue to give the metal a solid foundation. As long as gold holds near these levels, the bulls keep control and another run toward the highs stays on the table.
Bitcoin delivered the follow-through traders were waiting for, climbing 1.85% to close above $84,478. That's two straight green sessions, and this gain was larger than the last, which is exactly the kind of building momentum buyers needed to show. Crypto is now fully joining the risk-on mood instead of trailing behind it, a healthy change after weeks of choppy, frustrating action. The next test is whether buyers can keep the streak alive and push Bitcoin decisively out of its recent range. If they do, the trend could finally start turning in their favor. Until that breakout happens, though, caution is still warranted, and a drop back below recent lows would put sellers back in charge.
Treasury Yield Information
The 10-year Treasury yield climbed 0.57% today to close at 5.150, wiping out yesterday's dip and then some. That's the follow-through bond bulls didn't want to see. Yesterday's pullback looked like a possible breather, but sellers returned to the bond market and pushed yields to a fresh high for the week. The pattern is now clear: every attempt at relief gets sold, and the 10-year keeps grinding higher inside the danger zone. Until bond buyers show they can string together more than one good day, the trend in rates still points up.
Against each threshold, the picture got worse. The 4.5% level where equity valuations start to feel the squeeze now sits 65 basis points below today's close. The 4.8% mark that usually triggers broader selling is 35 basis points back. The 10-year is now 15 basis points above the 5% line for serious risk, so the framework has it firmly flagged as a real threat to stocks. Most concerning, the cushion under 5.2%, the level where the framework calls for a 20% or greater correction, shrank to just 5 basis points. That's a gap one hot session could easily close.
Stocks shrugged off the rate move for now, but the rotation tells you rates still matter. The Nasdaq led with a 1.05% gain and the Dow added 0.69%, while the Russell 2000 managed only 0.32%. That's a full reversal from yesterday, when small caps led as yields eased. Rate-sensitive small caps carry the heaviest floating-rate debt loads, so their lagging performance on a day yields rose fits the playbook perfectly. Growth names are rallying on their own strength, not because rates are helping. The VIX fell 3.76% to 16.66, its third straight cooldown, but complacency with the 10-year this close to 5.2% is exactly the setup that can turn ugly fast.
Thursday brings Unemployment Claims at 8:30 AM ET, which shouldn't move the bond market much unless the number surprises sharply. Another steep drop in energy prices today should help the inflation outlook, yet bond buyers ignored it, which tells you the selling in Treasuries runs deeper than oil. The key level to watch is 5.2%. A close at or above that line would trigger the framework's correction warning and put today's equity gains at serious risk. On the flip side, a move back under 5% would be the first real sign of relief and give small caps room to catch up. Until then, rates remain the biggest threat to this rally.
Previous Day’s Forecast Analysis
Heading into Wednesday, our AI model projected SPY's maximum range at $766 to $778, with the Call side dominating in an expanding band. That setup pointed toward trending price action with intermittent chop. With no economic news on the calendar, the forecast called for a session driven purely by technicals and positioning. SPY had finished Tuesday in the lower half of the projected range, wedged between first support and first resistance, which gave us a modestly bearish bias by position. That lean was offset by the Call-heavy band, though, giving the tape a constructive undertone. The VIX had dropped 5.10% to 17.50, and we noted that cooling fear should help cushion dips. The bigger picture stayed bullish, with SPY trading well above structural support near $640.
The key battleground was the tight zone between $768 and $770. We flagged $770 as the line in the sand and first resistance, with a clean break opening the door to $773, then $775 and $778 at the top of the range. On the downside, $768 was first support, and losing it was expected to send SPY toward $766. Below that, $765 and $764 formed a tight shelf, with $764 as the last hope for bulls and $760 in play if it gave way. We said whichever side won the battle at $768 or $770 would likely set the trend for the day.
The strategy favored buying dips at $766 as the preferred setup. Profit targets were $770, then $773, with runners aiming for $775 and $778 reserved for a strong trend day. Stops on longs belonged below $764. If bulls broke $770 with conviction, the plan was to skip the chase and buy a clean retest of $770 instead. Shorts were the secondary play and meant to be quick fades. A stall and rollover at $775 was the primary short trigger, targeting $773, $770 and $768, with stops above $778. Bear-side size was set at roughly half the bull side unless $764 cracked. We recommended letting the first 30 minutes play out, keeping stops in the 0.5-0.75% range, and staying out of the chop between $768 and $770. The bottom line was that bulls held the edge as long as $766 held.
Market Performance vs. Forecast
Wednesday's session stayed inside the model's projected maximum range of $766 to $778 from start to finish. The forecast called for trending price action with intermittent chop and said a directional move out of the current zone looked likely, and that is what played out. The forecast flagged a modestly bearish bias by position, but it also said the Call-heavy band gave the tape a constructive undertone. That undertone carried the day. SPY opened at $771.17, dipped to a low of $768.40, pushed to a high of $774.43 and closed at $773.17, up 0.54%. The model does not account for unpredictable external events. With no economic news on the calendar, positioning and technicals drove the tape, as the forecast expected, and the level structure framed the session with precision.
The battle at $768 and $770 was the key call of the day. The forecast said whichever side won there would likely set the trend for Wednesday's session. SPY opened above $770 and slipped back toward first support, but $768 held. The session low stopped less than half a dollar above that level, so buyers defended the first support without ever letting sellers test $766. With $768 secure, price worked through $770 and reached $773, the next upside target the forecast named. The rally stalled short of $775, the next resistance level, just as the model projected heavy supply would show up near the upper end of the range. The $778 ceiling and the downside support at $764 and $760 never came into play.
On the rising market side, the guidance said not to chase a break above $770 and to buy a clean retest of $770 as support, with targets at $773 and $775. The session gave traders that setup. Price pulled back through $770 toward $768, held, and then pressed through $773 into the close. The first target was reached and the stretch target at $775 stayed just out of reach, which validated the advice to take profits in layers rather than swing for the fences. The preferred dip-buy at $766 never activated because buyers stepped in above it, a sign that demand was stronger than the bearish tilt by position suggested. On the falling market side, the primary short trigger required a push into $775 that stalled and rolled over. The high stopped short of that level, so the short setup never triggered and capital stayed on the sidelines. Treating shorts as quick fades at roughly half the bull side size kept bear-side exposure minimal on a day when calls stayed in control.
The VIX dropped 3.76% to 16.66, extending Tuesday's cooling and sinking further below the 20 line. That backed the guidance to move size back toward full normal with 0.5-0.75% stops, which fit a session of orderly, contained swings. Volume came in below average, which matches the forecast's note about lighter participation and supports the suggestion to trim size slightly. The defense of $768, the push through $770 and the climb to $773 gave traders clear reference points all session. The framework adapts as conditions shift. With the long-term bull trend intact above structural support near $640, it remains a reliable guide for managing risk and spotting opportunity as the week unfolds.
Premarket Analysis Summary
The premarket analysis, posted before the opening bell, set up Wednesday with SPY at $770.62 in a call-dominated tape. The tone had flipped back after Tuesday's reversal reclaimed $766 and ran through $768 to $770, leaving price holding just above that round number. The bias hinged on $773, the defining level and the heaviest concentration on the board. Clearing and holding it would extend the rebound, while failing there would turn $770 into the battleground. The expected move ran from $762 to $776, about six points, and the notes pointed out that a call-dominated tape tends to pin around levels rather than run through them. Upside targets stepped through $772 as the first step, $775 as the next decision point, $777 as the spot where price should stall just past the top of the expected move, and $780 as max upside, the ceiling that rejected SPY two weeks ago. On the downside, $770 was the first level to watch as yesterday's ceiling turned floor, followed by $768 where the tape would begin to come apart, $765 as the point of last hope and heaviest support, and $762 as max downside.
The session played out almost exactly as the call-heavy setup suggested, with bulls grinding through the gate instead of blowing past it. SPY opened at $771.17, just above the $770 floor, and sellers tested it early. The low printed at $768.40, which slipped under $770 but held right on top of $768, the level where things would have started to unravel. That was as far as the bears got, so the quick trip to $765 never materialized. Buyers took control from there, cleared $772, and pushed through the $773 gate to tag a high of $774.43, stopping short of the $775 decision point. SPY closed at $773.17, up 0.54% on 28.84M shares of below-average volume, finishing right on top of the defining level. The VIX dropped 3.76% to 16.66, showing fear kept draining out of the market. The key takeaway is that the pinning behavior the notes described showed up clearly, with the whole day staying well inside the expected move and the close parked at the heaviest level on the board. Bulls won the $773 gate into the close, but on light volume they still have to prove they can hold it, with $775 the next hurdle and $770 and $768 the floors to defend.
Validation of the Analysis
Wednesday was a textbook example of the premarket map doing exactly what it was built to do. The notes centered the session on one defining level: "773 — the gate above us, the heaviest concentration on the board, and the level bulls really need; clear and hold it and the rebound extends." SPY opened at $771.17, just above the $770 level the notes called "yesterday's ceiling turned floor." Sellers made a push lower and briefly cracked $770, but the next level on the board did its job. SPY's low came in at $768.40, holding above $768 by less than half a point. The notes flagged $768 as "where the tape begins to come apart," and because it held, the "quick trip to 765" never got started. That meant the $765 point of last hope and the $762 max downside were never needed. Once that floor was defended, buyers took over and walked price right up the ladder.
SPY cleared $772, the level the notes called "the first step," and then pushed through the $773 gate that the entire session revolved around. The session high printed at $774.43, still short of the $775 decision point, so the next resistance above held firm. The real story was the close. SPY finished at $773.17, up 0.54%, sitting just above the exact level the notes named as the one bulls needed to "clear and hold." That's about as precise as level-based analysis gets. The notes also said the expected move ran from $762 to $776, "about six points," and that "a call-dominated tape favors pinning around the levels rather than running through them." The full session stayed inside that expected move, the high-to-low spread came in just over six points, and price spent the day rotating between marked levels before settling right on the heaviest one. The VIX dropped 3.76% to 16.66, which lines up with the notes' read that the tone was "flipping back" in favor of the bulls.
The trading value came from knowing which levels mattered and which ones were just noise. The dip under $770 could have shaken out nervous longs, but traders following the map knew $768 was the real line, and buyers who stepped in near there got a high-quality entry with a tight stop just beneath it. The reclaim of $770 confirmed the bullish branch, $772 served as a natural first profit target, and the break through $773 gave a clean continuation trigger toward the $775 level. The push into $774.43, just under $775, then handed short-term sellers a well-defined fade setup with clear risk overhead. Just as important, the map kept traders out of bad trades. Because $768 held, there was no reason to press shorts toward $765, and because the notes warned this tape favored pinning rather than breakouts, nobody following the levels had reason to chase a run toward $777 or $780. A session that defended key support, cleared the defining level, and closed right on top of it shows how well the framework captured the action. Heading into Thursday, the battle lines are clear: bulls need to hold above $773 and take out $775, while bears need to drag price back under $770 to put the lower targets back in play.
Looking Ahead
Thursday's calendar brings one scheduled release to watch: weekly Unemployment Claims at 8:30 AM ET. It's a medium-impact report, so it doesn't carry the punch of a payrolls or inflation print, but it lands right before the opening bell and can set the early tone for futures. Claims are one of the most timely reads on the labor market because they come out every week, which makes them a useful pulse check between the bigger monthly jobs reports. A number that comes in noticeably higher than expected could feed worries that hiring is cooling faster than investors would like, while a lower-than-expected print would point to a job market that's still holding up. How the market reacts depends on the story traders are already telling themselves. If the focus is on growth, a soft reading could weigh on stocks. If the focus is on the path of interest rates, that same soft reading might be welcomed as a reason for policymakers to ease up.
Traders should be ready for a quick reaction at 8:30 AM ET, but they shouldn't overcommit to it. Claims data can be noisy from week to week, and a single report rarely changes the bigger picture unless it breaks sharply from recent trends. Watch whether any premarket move holds once the cash session opens. A reaction that sticks into the first hour carries more weight than one that fades. Beyond the data, earnings and sector rotation can still drive plenty of action, so keep your key levels mapped out, size positions sensibly, and let price confirm direction before you put fresh capital to work.
Market Sentiment and Key Levels
Wednesday gave the bulls another win, and this time big tech led the charge. Buyers absorbed an early dip, pushed the market to fresh session highs, and held most of those gains into the close. SPY finished near the top of its range, but participation stayed light, so this still looks like steady grinding rather than aggressive conviction buying. The leadership story flipped from Tuesday. The Nasdaq jumped 1.05% and the Dow added 0.69%, while the Russell 2000 managed only 0.32%. Yesterday's rotation into small caps cooled off as money moved back into growth names. That isn't necessarily a bad thing, since a market that can rally on either small-cap strength or tech strength has more than one engine. The risk is that it signals the broadening move was short-lived, which leaves the tape leaning on mega caps again. Bitcoin's 1.85% gain confirmed that speculative appetite remains healthy. Gold's modest 0.18% rise shows some investors are still holding hedges even as stocks climb. Fear kept fading, with the VIX dropping 3.76% to 16.66, pushing the fear gauge further below the 20 mark. Control clearly belongs to the bulls, though the thin participation means they haven't fully earned our trust.
SPY is sitting right on top of first support at $772, with first resistance just overhead at $775. That tight zone sets up Thursday as another test of whether buyers can keep pressing. A clean break above $775 opens the door to $777, with $780 and $785 in play if tech leadership keeps rolling. On the downside, losing $772 likely sends SPY toward $768, followed by $765 and $762. If $762 gives way, there is little to keep price from falling toward $760. The bigger picture remains firmly bullish, with the long-term trend intact well above structural support at $640. That keeps this a broader dip-buying environment as long as key levels hold. Thursday's projected maximum range runs from $764 to $777, with the Call side dominating in an expanding band that points to trending price action mixed with intermittent chop. Notice, though, that SPY closed in the upper part of that range, which leaves limited room before it hits the ceiling. Unemployment Claims hit at 8:30 AM ET on Thursday, October 22, but the report is unlikely to move the market, so positioning and technicals should drive the action again. Traders will want to see whether tech can hold its leadership or whether small caps slip further behind. Elevated yields remain a background risk, while the sharp drop in oil eases some of the inflation pressure. With price already crowding the upper end of the range, we favor shorting rallies near $777 rather than chasing strength into resistance. Keep stops tight above that level, watch whether $772 holds as support, and let the bulls prove they can break through $777 before flipping more aggressive on the long side.
Expected Price Action
Thursday's session brings actionable intelligence generated by our AI model, which projects SPY's maximum range at $764 to $777. With the Call side dominating in an expanding band, the model is calling for trending price action with intermittent chop. Thursday morning brings Unemployment Claims at 8:30 AM ET, but that report is unlikely to move the market, so technicals and positioning should stay in the driver's seat. Wednesday built on the prior day's rebound, with buyers shaking off an early dip and pressing SPY back toward the upper end of its recent zone. That leaves SPY settled in the upper part of the projected range, sitting just above the model's first support, which gives us a bullish bias by position heading into Thursday. The Call-heavy band reinforces that constructive tone, but with price already leaning toward the top of the range, the room to run before hitting overhead supply is getting thin. The VIX dropped 3.76% to 16.66, another step lower in fear that helps cushion pullbacks and keeps buyers comfortable stepping in. With an expanding band and only a minor data release on the calendar, a directional push out of the current zone looks likely.
The line in the sand for Thursday is $772, the model's first support sitting right beneath where SPY finished. As long as that level holds, bulls keep control and $775 becomes the first test overhead. A clean break above $775 opens the door to $777 at the top of the projected range, and that's exactly where we favor shorting rallies, since any squeeze into that zone should run into heavy supply. Beyond that, $780 and $785 stand as further resistance, but reaching them would take a real catalyst. On the downside, losing $772 likely sends SPY toward $768, and below that $765 and $762 form the final shelf of support, with $762 standing as the lowest support and the point of last hope for bulls. If $762 gives way, there is little to keep price from falling toward $760. The bigger picture remains healthy, with SPY trading well above structural support near $640 and the long-term bull trend intact, so this is still a dip-buying market on a broader timeframe. In the short run, the playbook is straightforward. Let the claims number hit and the opening auction settle before committing. A firm hold of $772 keeps the trend pointed higher and puts $775 in play quickly, while a push through $775 could carry SPY to $777, where taking profits or fading the move makes sense. A failure at $772 could mean a quick trip to $768, and if $768 can't hold, the slide toward $765 and $762 could accelerate. Whichever side wins the battle at $772 or $775 likely sets the trend for Thursday's session.
Trading Strategy
The VIX dropped 3.76% to 16.66, sinking further below the 20 line as fear kept draining out of the market and buyers held the upper hand. With the Call side dominating an expanding band, size can stay near full normal, though trimming slightly still makes sense given the lighter participation behind the advance. Keep stops in the 0.5-0.75% range from entry. Thursday brings Unemployment Claims at 8:30 AM ET, but that report is unlikely to move the market, so expect the tape to trade mostly on technicals with trending moves broken up by intermittent chop. Let the first 30 minutes show their hand before committing, and avoid getting trapped in the tight middle zone between $772 and $775 where the chop does its damage.
In a rising market scenario, buying dips at $768 is our preferred long setup. A pullback that tags $768 and holds is the cleanest trigger, especially if the VIX keeps easing while price firms up. The first profit target is $772, with $775 next if buyers keep pressing. Runners can aim for $777 at the top of the projected range, and $780 should be treated as a stretch target reserved for a strong trend day. Stops on longs belong below $765, and aggressive traders can give it room down to just above $762. If bulls punch through $775 with conviction, don't chase the breakout. Buy a clean retest of $775 as support instead, targeting $777 and $780. Take profits in layers into resistance rather than swinging for the fences.
In a falling market scenario, the model actually favors fading strength, so shorting a rally into $777 is the setup to watch on the bear side. A push into $777 that stalls and rolls over is the primary short trigger, particularly if the VIX starts to bounce while price fails to break higher. The initial profit target is $775, with $772 and then $768 in play if sellers take over. Stops on shorts belong above $780, just beyond the ceiling of the projected range. If price loses $768, the $765 and $762 levels come into focus quickly, and a break of $762 leaves little support until $760. Short a failed retest of $762 from underneath, targeting $760 as the final stretch target on a heavy trend-down day. With calls still in control, keep bear-side size at roughly half to two-thirds of the bull side unless $768 cracks, at which point shorts can take the lead. The long-term bull trend remains intact above $640, so dip-buyers will likely step up on deeper pullbacks. For now, the bulls have the edge as long as $768 holds.
Model’s Projected Range
SPY's projected maximum range for Thursday is $764 to $777, with the Call side dominating in an expanding band that suggests trending price action with intermittent chop. Thursday, October 22 brings Unemployment Claims at 8:30 AM ET, which is unlikely to move the market. SPY opened at $771.17, dipped to a low of $768.40, then pushed to a high of $774.43 before closing at $773.17, up 0.54%. SPY is trading near our model's first support at $772, and traders will keep an eye on the broader macro backdrop for any shift in sentiment. A break above $775 opens the door to $777, while a loss of $772 targets $768, and if the lowest support at $762 breaks there is little to keep price from falling toward $760. 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 $775, $777, $780, $785, while support rests at $772, $768, $765, $762. With SPY closing in the upper part of the projected range, we favor shorting rallies near $777. Bitcoin climbed 1.85% to close above $84,478, and the MAG stocks put in a mostly green day led by Tesla, up 3.41%, with Alphabet the lone laggard, down 1.62%, so both leadership groups showed strength that supports the broader rally. The VIX closed at 16.66, down 3.76%, suggesting easing fear as buyers stayed in control throughout the session. SPY continues to hold well above its structural support near $640, keeping the bigger-picture uptrend firmly in place.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended Wednesday in a Bullish Trending Market State with SPY closing at $773.17. MSI resistance is $774.28 and MSI support is $771.89 heading into Thursday. The MSI did not rescale overnight and held its Bullish Trending state into the open, with no extended targets visible in the premarket. The early AM session brought a quick scare. SPY dipped below MSI support and tagged a session low of $768.40, but the sellers couldn't follow through, and price reversed sharply. From there the MSI went through rapid rescaling higher, a clear sign of a strong trend. Extended targets printed above during the AM session as buyers took control. Into the early PM session the rescaling stopped, and the MSI settled into a moderate $2.39 Bullish Trending state that held through the close. No extended targets were printing at the close. A range this size gives price a fair amount of room to work higher without forcing the MSI to rescale again.
For Thursday that implies a slow grind higher, though without extended targets at the close the move may be modest and is likely to find resistance at key levels above. The bullish state says the path of least resistance is still up. The lack of extended targets says the herd isn't fully on board yet, so mean reversion signals off MSI resistance and the overhead Call walls should be expected. MSI support is $771.89 with resistance at $774.28.
Key Levels and Market Movements:
Tuesday we stated, "Bulls want to see overnight price hold above $766.6 and stay near the $769.32 close," and added, "From there they need to reclaim $770.41 with conviction, then push toward $772.22 and Tuesday's $772.28 high," while also noting, "If the MSI rescales higher and extended targets print above again, that would be the signal that buyers are ready to take another shot at the level that rejected them twice on Tuesday." The bulls delivered, but they took a detour first. SPY opened at $771.17, already above $770.41, before an early dip below MSI support pulled price down to $768.40, just under Tuesday's $769.32 close. The $766.6 level was never seriously threatened, and the selling dried up fast. SPY reversed hard, and the MSI rescaled higher in rapid succession with extended targets printing above in the AM session. Price blew through $772.22 and Tuesday's $772.28 high, the exact level that had rejected buyers twice, and pushed to a session high of $774.43. That was the signal we were looking for, and it delivered.
Three trades followed. The first was a failed breakdown long. SPY slipped under MSI support early, then quickly reclaimed it, and traders could buy the reclaim with a stop under the $768.40 low while targeting $770.41 and then $772.22. The second came during the rapid rescaling higher. Each new MSI support level that formed as extended targets printed above offered another chance to buy a dip and ride price into the next level, carrying SPY through $772.28 and into the $774 area. The third came once the MSI settled into its final Bullish Trending state. A dip to $771.89 MSI support that held offered a long targeting $774.28 MSI resistance, and price rotated back up toward the top of the range before closing at $773.17. At minimum it was a 3-for-3 session for traders following the framework.
SPY gained 0.54% on volume of 28.84 million shares, below average and the lightest turnover of the week so far. Three straight up days on thinning volume tell us buyers are steady but not exactly charging in. The VIX dropped 3.76% to 16.66, which shows fear continuing to bleed out of the market. It was an easy day to read and execute with substantial setups, 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:
Thursday has light economic news so the market is likely to grind higher given the Bullish Trending at the close, though the move may be modest. Unemployment Claims at 8:30 AM ET is a medium-impact release that could jolt the premarket, but it's unlikely to change the bigger picture on its own. The MSI closed in a moderate $2.39 Bullish Trending state with no extended targets printing. That points to a slow grind higher on Thursday, though the move is likely to find resistance at key levels above, including MSI resistance and the overhead Call walls. $774.28 remains MSI resistance and $771.89 remains MSI support.
Bulls want to see overnight price hold above $771.89 and stay near the $773.17 close. From there they need to reclaim $774.28 with conviction, then push through Wednesday's $774.43 high toward the premarket levels above. If the MSI rescales higher and extended targets print above again, that would be the signal that the herd is finally joining the move. Bears want to see $771.89 fail with the MSI rescaling lower and extended targets printing below. That would press SPY back toward Wednesday's $771.17 open and $770.41, with Wednesday's $768.40 low in play if the selling picks up. With the VIX sliding to 16.66 and SPY stringing together gains, the bears are short on ammunition, but the bulls still have to prove they can clear the wall near $774.
Since the MSI closed Bullish Trending, the primary setup for Thursday is buying a dip to $771.89 MSI support that holds, using a break of $771.17 as the warning sign, and targeting $773.17 and then $774.28. A failed breakout above $774.28 that slips back under offers a mean reversion short back toward $771.89, and that setup carries extra weight with no extended targets and Call walls stacked overhead. A failed breakdown below $771.89 that quickly reclaims the level, just like Wednesday's early shakeout, offers a long back toward $774.28. If $774.28 breaks with the MSI rescaling higher and extended targets printing above, that level flips to support, and traders can buy dips into it while targeting the premarket levels above. If $771.89 breaks with the MSI rescaling lower and extended targets printing below, that level flips to resistance, and traders can sell rallies into it while targeting $770.41 and the premarket levels below. The bias favors longs until the MSI shifts, but expect sellers to show up at resistance.
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 $774 to $795 and higher strike Calls, indicating the Dealers' belief that upside is limited on Thursday. They are no longer buying ATM Calls, nor are they selling ATM Puts, which points to a balanced market that is likely to range. The ceiling for Thursday appears to be $780, which carries the highest net gamma on the board and stands as major resistance overhead. To the downside, Dealers are buying $773 to $705 and lower strike Puts in a 3:1 ratio to the Calls they're selling, displaying continued concern that prices could move lower. In this positive gamma environment, Dealers will look to defend support and resistance levels rather than break out through them, so we recommend looking for mean reversion trades at or near major levels. $780 is certainly one of those levels, but $775 will also prove difficult to break through. Support is solid at $769, which should keep price from falling. That said, if $769 does fail, gamma shifts to negative and price could easily test lower levels, though we think this is a low probability event without an external catalyst. Above $772 is bullish and below $769 is bearish, with everything in between being choppy and trap filled. Dealer positioning is unchanged at neutral/slightly bullish.
Looking Ahead to Next Friday:
Dealers are selling SPY $778 to $800 and higher strike Calls while buying $774 to $777 Calls, indicating the Dealers' desire to participate in any rally into the end of the week. They are buying ATM Calls to stay positioned for that upside. The ceiling for the week appears to be $780. To the downside, Dealers are buying $773 to $700 and lower strike Puts in a 4:1 ratio to the Calls they're selling, displaying continued concern that prices could move lower. Dealers remain hedged but have not added to their protection for this week. Below $765 is bearish and above $777 is bullish, with the range in between being choppy and trap filled. SPY will find major resistance at $780 and support at $760. SPY spot sits right on the border between positive and negative gamma, and a drop below $772 will turn gamma negative, which means Dealers are less likely to support price on the way down. Above $772 gamma is positive, so Dealers will likely fade rallies near major resistance such as $780. For the week Dealer positioning is unchanged at neutral/slightly 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
Short rallies near $777, targeting $772 and $768, with stops above $780.
Keep size light around Unemployment Claims and 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!
