Market Insights: Friday, October 23rd, 2026
Market Overview
Stocks slipped again on Friday as the selling spread well beyond the AI trade, with the Dow dropping 1.2%, the S&P 500 falling 0.5%, and the Nasdaq losing 0.2% after Thursday's steep slide in tech. That locked in a second straight losing week for the S&P 500 and Nasdaq, though the Dow still managed a weekly gain. The AI crowd tried to bounce after fears over rising financing costs and slowing capex pummeled neoclouds like CoreWeave, but Nvidia and AMD finished mixed. This week's earnings headliners, SpaceX, Tesla, and Meta, steadied after Thursday's drubbing. SpaceX has been on a wild ride, surging Wednesday on a Q3 beat and Elon Musk's open support for a merger with Tesla, then giving it all back Thursday. Shares edged higher Friday on a Bloomberg report that the company wants to lease space on 80,000 US cell sites to build a terrestrial network and is reportedly in talks with Crown Castle and American Tower. In Q3, Connectivity revenue, mostly Starlink, jumped 69% to $5.2 billion, and President Gwynne Shotwell said Starlink added 1.6 million subscribers to reach just under 14 million broadband consumer subscribers. Cybersecurity was the bright spot, with SailPoint, Cloudflare, and Palo Alto Networks each jumping more than 7% after an Evercore ISI survey showed security budgets strengthening around data, AI, identities, and cloud, with Okta and Fortinet flagged for strong pipelines. The group has been on fire this year thanks to AI-driven spending and warnings about increasingly powerful agents, and the First Trust Cybersecurity ETF hit an all-time high earlier this month and is up roughly 7% over five days.
Oil climbed to a 6-month high, with Brent settling at $116.72 for its third straight weekly gain and WTI closing just above $103, as traders priced in escalating Middle East fighting and attacks near the Red Sea raised supply worries. Treasury yields ticked higher, and airlines took a beating, with United, Delta, and American each falling more than 4%. For the second straight day, President Trump hinted at escalation in Iran after the midterms, with the Strait of Hormuz still at the center of the conflict. "The question is: Do we want to finish it off or do we just want to let it wither because we're getting everything we wanted," he said while touting Middle East oil exports topping prewar levels. His UN ambassador told the Financial Times the war could last another year, though he hopes negotiations end it sooner. Moderna rebounded after opening lower, climbing into positive territory a day after plunging more than 17% in its worst session since Aug. 20, as investors digested its late-stage melanoma vaccine data. Meanwhile, SK Hynix, which raised $26.5 billion in July in the biggest US listing ever by a foreign company, shelved plans to list its Solidigm flash memory unit in the US, citing market conditions and share price trends. Solidigm had aimed to raise $10 billion to $15 billion at a valuation of up to $150 billion, according to estimates cited by The Wall Street Journal.
SPY Performance
SPY opened at $759.90, gapping down again from yesterday's close of $764.06 and starting the session below the $761.17 low that we flagged as the first marker to watch. That means the bears got their follow-through before regular trading even started. Buyers did push back early, and SPY rallied to a session high of $763.47, reclaiming $761.17 and getting within striking distance of the $764.44 level we said needed to be recaptured first. But that bounce stalled just short of it, and sellers stepped in right where they needed to. SPY slid to a session low of $758.68 and finished at $759.96, closing back below $761.17 and well under the $764.44 to $766.71 zone that has now flipped into resistance.
SPY fell 0.52%, a much smaller loss than yesterday's drop, and it closed essentially right at its open. That's an important detail. Unlike yesterday, sellers didn't keep pressing during regular hours. Almost all of today's damage came from the overnight gap, and the session itself ended in a stalemate. The volume adds another layer to the story. Turnover came in at 30.61 million shares, below average and a clear step down from yesterday's near-average participation. That cuts both ways. The bears weren't able to build on yesterday's conviction with another heavy wave of selling, which suggests the urgency to dump shares cooled off. But the bulls also failed to show up in size when SPY bounced toward $764.44, and a rally that fades on light volume doesn't inspire much confidence. The VIX rose 3.57% to close at 19.71, adding to yesterday's spike but at a much slower pace. It's now sitting just below the 20 mark for a second straight session without breaking through. That tells us fear is still elevated, but it isn't escalating into panic. Traders are keeping their protection in place rather than scrambling to add more.
The big question now is whether this slower, quieter selling marks the market finding its footing or simply catching its breath before another leg lower. Two straight gap downs and two failed bounces below resistance keep the burden of proof firmly on the bulls. On the upside, $761.17 is the first level SPY needs to reclaim, since it went from support to resistance during today's session. Above that, today's high of $763.47 and the $764.44 level are the next hurdles, and $766.71 remains the line that would truly repair the damage. On the downside, today's low of $758.68 is the key marker, and a close below it would confirm that sellers still have control. Yesterday the bears broke the floor on real volume, and today they extended the move without much effort, but they also didn't add much pressure once the bell rang. The selling is losing intensity, yet buyers haven't proven they're ready to fight back. Until SPY can reclaim $764.44 with stronger participation behind it, the momentum still belongs to the sellers, even if their grip is starting to loosen.
Major Indices Performance
The Russell 2000 took the top spot, slipping just 0.2% in a session where nobody finished in the green. Small-caps have been surprisingly sturdy through the recent rotation swings, and they once again managed to avoid the worst of the damage. Holding up this well on a broad down day shows that buyers are still willing to stand behind the riskier end of the market, even with energy prices surging and inflation worries creeping back into the conversation. Small-caps have now kept their recent breakout intact through several choppy sessions, and that kind of staying power suggests the bid underneath them hasn't gone away.
The Nasdaq finished a hair behind with a 0.21% loss, which is a much calmer showing after the prior session's painful drubbing. Tech didn't bounce, but it didn't extend its slide much either, and that stabilization matters after such an aggressive round of selling. Mega-cap names were mixed rather than uniformly dumped, which helped keep the index from sinking further. Dip buyers weren't exactly charging in, but the panic selling cooled off and the growth trade found some footing, at least for now.
The Dow brought up the rear with a hefty 1.23% drop, a sharp reversal after it served as the market's safe harbor just one session earlier. The blue chips that sheltered investors during the tech selloff got hit hard this time, as industrials and other old-economy names felt the pressure of a spiking energy market that threatens to squeeze margins and complicate the Fed's path. The rotation flipped direction yet again, with money flowing out of the defensive corners that had been holding the market together. The S&P 500 landed in the middle of the pack, weighed down by weakness spread across both value and growth. The VIX rose 3.57% to close at 19.71, sitting right below the 20 level and showing that nervousness is lingering in the market even without a dramatic selloff.
Notable Stock Movements
Alphabet was the biggest mover in the Magnificent Seven, sliding 1.24% to lead the group lower. That's a far cry from the steep plunge Meta delivered last session, but it still shows sellers haven't finished working through big tech. Alphabet has been one of the steadier names in the group, so seeing it take the top spot on the losing side tells you the pressure is spreading beyond just one or two weak links. If Alphabet can't bounce back quickly, it could become the next name traders lean on when they want to trim exposure to mega-cap growth.
The group finished with another mostly red session, extending the rough patch that started last time out. Microsoft was the lone bright spot, gaining 0.66% to finish as the only winner of the seven. That's another interesting split, because just like Apple held up last session, traders are once again finding one safe harbor inside big tech while selling the rest. Rotating the "hiding spot" from Apple to Microsoft suggests investors still want mega-cap exposure but are getting picky about which names they trust. The losses were milder this time, which hints the selling may be losing some steam even if buyers aren't ready to step back in.
The broader market tells a different story than last session. This time the Dow took the biggest hit with a 1.23% drop, while the Nasdaq slipped just 0.21% and the Russell 2000 dipped 0.2%. That means big tech actually held up better than the blue chips, which is a meaningful shift after last session's tech-led selloff. Even so, the VIX rose 3.57% to 19.71, keeping fear parked just below the key 20 level and showing traders aren't fully comfortable yet. Monday brings no economic news, so these names will trade on technicals and positioning rather than fresh headlines. If Microsoft keeps holding up and Alphabet finds support, the Nasdaq could stabilize and reclaim some leadership. But if the selling in big tech picks back up while the Dow stays weak, the market could have a hard time finding any group strong enough to carry it higher.
Commodity and Cryptocurrency Updates
Crude oil extended its rebound in a big way, surging 4.18% to close at $103.63. That puts the black gold firmly back above the $100 mark, and the size of the move shows buyers aren't done yet. Crude has rallied well above $70 and far beyond longer-term model expectations, and the geopolitical tensions and supply disruptions fueling this run are clearly still front and center. Any idea that the fear premium was fading has been put to rest for now. With no economic news on deck Monday, energy traders will be watching headlines closely, since any fresh supply concern could push prices even higher. The bigger worry hasn't changed. A sustained move this far above $70 keeps pressure on inflation and could seriously complicate the Fed's path on rate policy if energy costs stay this elevated.
Gold kept sliding, falling 1.16% to close at $4,013. That marks a second straight loss and puts the metal right on the doorstep of the $4,000 level, a big psychological line that bulls will want to defend. The selling looks more measured than the prior session's sharp drop, but the pattern is the same. Gold is struggling to catch a safe-haven bid even as fear creeps higher, which suggests traders may still be raising cash or trimming winners. The long-term story remains solid, backed by inflation uncertainty, steady central bank buying, and ongoing geopolitical headlines. Still, a clean break below $4,000 could invite more selling before the metal finds firm footing again.
Bitcoin barely budged, slipping 0.18% to close above $81,161. After the prior session's sharp drop, a near-flat day is a small win for the bulls, showing sellers didn't have the energy to press their advantage. The crypto still isn't showing real strength, though, and it continues to trade like a high-risk asset tied to the broader mood. Buyers need to defend this area and build a base before any talk of breaking out of the recent range makes sense. If Bitcoin stabilizes here, it could set up another push higher. A drop below recent lows, however, would put sellers firmly back in control.
Treasury Yield Information
The 10-year Treasury yield rose 0.71% today to close at 4.990, giving back part of yesterday's sharp drop and creeping right back up to the edge of the 5% line. The relief rally in bonds didn't get any follow-through. Buyers who stepped in with conviction one session earlier went quiet, and sellers pushed yields higher into the weekend. It wasn't a violent reversal, but it was the wrong direction for anyone hoping yesterday marked a turning point. The question we raised was whether that drop was real demand or just a flight to safety. Today's bounce leans toward the second answer.
Against each threshold, the picture slipped back. The 4.5% level where equity valuations start to feel pressure now sits 49 basis points below today's close, so that gap is wider, but only because the yield is moving the wrong way. The 4.8% mark that usually triggers broader selling is 19 basis points back. The real concern is that the 10-year now sits just 1 basis point under the 5% line for serious risk, which means yesterday's 5-point cushion is nearly gone. The buffer under 5.2%, where the framework calls for a 20% or greater correction, shrank from 25 basis points to 21. That's still more room than the market had earlier in the week, but the trend is moving the wrong way again.
This time stocks felt it, and the damage landed somewhere new. The Dow fell 1.23%, by far the worst of the major averages, while the Nasdaq slipped 0.21% and the Russell 2000 dipped 0.2%. Yesterday's selling was a tech problem that had nothing to do with rates. Today the pain spread to the blue chips as yields pushed back toward 5%, which fits the framework's warning that this zone weighs on the broad market and not just growth names. The VIX rose 3.57% to 19.71, building on yesterday's spike and showing that fear hasn't cooled even as tech found its footing. Another big jump in crude keeps inflation worries alive and gives bond sellers more ammunition.
Monday brings no economic data, so yields will trade on positioning, energy prices, and whatever risk sentiment does to start the week. The key level is still 5%, and the 10-year is sitting right on top of it. A close back above 5% would flip the framework's serious-risk flag back on and suggest yesterday's drop was another head fake in a rising-rate trend. If bonds can push the yield back toward 4.95% or lower, it would show buyers still have some fight left. Until the 10-year makes a real run at 4.8%, equities are working against a headwind that isn't going away.
Previous Day’s Forecast Analysis
Heading into Friday, our AI model projected SPY's maximum range at $756 to $772, with the Put side dominating an expanding band. That setup pointed to trending price action with intermittent chop. The forecast carried a bearish bias. SPY was sitting in the middle of the projected range just above first support, which was neutral on position alone, but the Put-heavy band tipped the scales toward the sellers. The model also flagged Flash Manufacturing PMI and Flash Services PMI at 9:45 AM ET, followed by Revised UoM Consumer Sentiment and Inflation Expectations at 10:00 AM ET, as likely sources of significant volatility in the first hour. With the VIX rising 17.39% to 19.58, the expectation was that traders wouldn't be quick to chase bounces and that a directional break out of the current zone was likely.
The key battle lines were drawn at $762 and $767. $762 was the line in the sand on the downside, with $760, $757, and $755 lined up beneath it, and $755 marked as the bulls' last hope before a potential slide toward $750. On the upside, $767 was the level buyers needed to clear to change the tone, with $770, $773, and $775 as further resistance. The preferred trade was shorting a failed rally into $767, targeting $762 and $760 first, then $757 and $755 as stretch targets. Stops were set above $770, or just below $773 for aggressive traders. A firm break of $755 called for shorting a failed retest from underneath, aiming for $750. On the bull side, the plan was to buy a dip at $762 that held, targeting $767 and then $770, with stops below $760. A clean retest of $767 as support would open $770 and $773. The strategy called for cutting size to half to two-thirds of normal and keeping stops at 0.5-0.75%. It also advised waiting for the 10:00 AM data to be digested, avoiding the choppy zone between $762 and $767, and keeping bull-side size at half of the bear side unless $767 was reclaimed.
Market Performance vs. Forecast
Friday's session stayed entirely inside the model's projected maximum range of $756 to $772, a clean confirmation of the day's boundaries. The forecast called for a bearish bias, with the Put side dominating an expanding band, and that call proved correct. SPY opened at $759.90, peaked at $763.47, dipped to a low of $758.68 and closed at $759.96, down 0.52%. The model does not account for unpredictable external events like surprise headlines or shifts in sentiment after the data. Even so, Friday's busy morning of PMI and consumer sentiment releases never pushed price beyond the projected range. The level structure mapped the session with impressive accuracy, and the sellers who owned Thursday's tape kept the upper hand into the weekend.
The battle at $762 was the key call of the day. The forecast named it the line in the sand and said that if it gave way, price would likely slide toward $760. SPY opened with that break already in place, sitting just beneath $760. Buyers then tried to reclaim the zone, and the session high pushed only slightly above $762 before stalling well short of $767. That rejection carried price back down. The low held above the $757 shelf, and SPY finished almost exactly on the $760 target. The warning to avoid the tight middle zone between $762 and $767 also paid off, because the only push into that area quickly faded. The upside levels at $770, $773 and $775 never came into play, which fits the forecast's view that reaching them would take a real catalyst.
On the falling market side, the preferred short at $767 never triggered because buyers couldn't generate enough strength to test it. Still, the forecast's roadmap held up. A break of $762 opened the path toward $760, and that sequence unfolded with the open and the close bracketing the first downside target. The $755 and $750 stretch targets stayed out of reach, so the guidance against chasing breakdowns was never tested. On the rising market side, the long trigger required a pullback that tagged $762 and held. Price opened beneath that level, and its brief recovery above $762 couldn't stick. For anyone who stepped in early, the stop below $760 meant risk management protocols protected capital as the session slipped to its low. The advice to keep bull-side size at roughly half of the bear side until $767 was reclaimed kept exposure light on the weaker side of the tape.
The VIX rose 3.57% to 19.71, keeping fear elevated but still just below the 20 line. That fits a session that leaned lower without breaking down. Volume came in below average, which suggests the selling was steady and controlled rather than panicked. The rejection near $762, the drift back to $760 and the support holding above $757 all played out across levels the forecast had already named. 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 heading into next week.
Premarket Analysis Summary
The premarket analysis, posted before the opening bell, set up Friday with SPY at $762.50 in a put-dominated tape. Price was drifting lower after Thursday's gap-down was bought back into the mid-$760s, which left it sitting right between the two heaviest levels on the board to close out a week of whipsaw. The bias hinged on $765, the defining level and the gate above, where the tape would begin to repair and the heaviest two-way battle was expected. Reclaiming and holding it would let the week end with a save, while failing there would keep sellers in control into the close. The expected move ran from $753 to $769, about eight points and the widest in a month, and the notes warned that moves in a put-dominated tape tend to accelerate rather than fade. Upside targets stepped through $764 as the first step, $767 as the next decision point, $769 as the top of the expected move where price should stall, and $770 as max upside, a major round number and the week's ceiling. On the downside, $761 was the first level beneath spot, followed by $760 as the line in the sand and the heaviest support on the board, $757 as the point of last hope, and $755 as max downside.
The session leaned to the bearish side of the map, with SPY opening at $759.90, already just under the $760 line in the sand. Buyers pushed back early, and the high reached $763.47, clearing $761 but falling short of the $764 first step. That meant the $765 gate never came into play, and everything above it went untouched. Sellers then pressed back under $760, and the low printed at $758.68, slipping beneath the line in the sand but holding above the $757 point of last hope. SPY closed at $759.96, down 0.52% on 30.61M shares of below-average volume, finishing a hair under $760. The VIX rose 3.57% to 19.71, showing that hedging demand stayed firm into the weekend. The key takeaway is that $760 flipped from support into a ceiling and the week closed below it, but the light volume and the defense of $757 kept the move from getting ugly. Bulls need to reclaim $760 and then $765, while $757 and $755 remain the levels to defend.
Validation of the Analysis
Friday's session stayed inside the lower-middle part of the premarket map, and the most important levels did their jobs. The notes were written with spot at 762.50, but SPY opened at $759.90, just under the $760 level the notes called "the most important level below" and "our line in the sand." That set up the key question for the day: would the gap under $760 turn into the fast slide the notes warned about, or would buyers defend the zone? The answer was a mix of both. Sellers controlled the bigger picture, but price never broke down cleanly.
The upside levels capped the day almost perfectly. Buyers pushed SPY back through $760 and $761, and the high printed at $763.47, stalling just under $764, the level the notes called "the first step." Price never got near the $765 gate, described as "where the tape begins to repair." The notes were clear about what that meant: "fail there and sellers keep control into the close." That is exactly what happened. After the rejection under $764, SPY faded steadily. On the downside, the low came in at $758.68, holding well above the $757 "point of last hope." Because $757 never gave way, the $755 max downside never came into play. The close was the sharpest part of the day. SPY finished at $759.96, down 0.52%, landing within pennies of the $760 level the notes named "the heaviest support on the board." The notes said participants were "bracing for larger swings" in a put-dominated tape, and the VIX rose 3.57% to 19.71, which matches that defensive tone. The actual range was under five points, well inside the eight-point expected move. With volume below average, sellers stayed in control but never had enough force to break the support ladder.
The trading value came from knowing exactly where the ceiling and the floor were. Traders following the map knew the rally off the open was running into $764 and that $765 was the level price needed to change the tone. The stall at $763.47 gave short-term sellers a clean fade setup with risk clearly defined above $765, and $761 and $760 were natural profit targets on the way down. Price reached both and closed right on the second. Buyers had a setup too. The dip under $760 could have looked like the start of the "fast trip to 757" the notes described, but traders watching the map knew $757 was the real line. Longs who stepped in near the low had a tight stop beneath $757 and an easy first target back at $760, which is right where the session ended. The map also kept traders out of bad trades. With $765 never challenged, there was no reason to chase longs toward $767 or $769. With $757 holding firm, there was no reason to press shorts toward $755. A session that topped just under the first level above, bottomed above the point of last hope, and closed on the line in the sand shows how precisely these levels framed the week's final day. Heading into next week, the battle lines are clear: bulls need to win back $764 and $765 to start repairing the tape, while bears need a decisive break of $757 to finally open the door to the lower targets.
Looking Ahead
Monday's calendar is wide open, with no high-impact economic releases on the docket. After a Friday packed with PMI and consumer sentiment data, traders get a clean slate to start the new week. Without any scheduled reports to spark sudden swings, price action should come down to how investors feel about the bigger picture. That means the market's tone will likely be set by positioning, earnings headlines, and any news that breaks over the weekend. Quiet days like this can cut both ways. Sometimes the lack of catalysts leads to a sleepy, range-bound session. Other times it lets an existing trend keep running because nothing gets in its way. Either way, Monday gives traders a chance to think through Friday's data without a fresh round of numbers muddying the picture.
Use the session to position rather than react. With no data hitting the wires at 8:30 AM ET or 10:00 AM ET, the opening move will mostly reflect overnight futures action and any weekend developments, so watch how the market handles the first hour before committing to a direction. If buyers or sellers push hard early and the move holds into the afternoon, that tells you something real about conviction heading into the week. If the market drifts aimlessly, that's a sign to stay patient and keep your powder dry. Low-catalyst days are also a good time to review your watchlist, tighten up stops on existing positions, and map out key levels you'll want to act on once the market gives a clearer signal. Volume may run lighter than usual without a data release to draw traders in, which can make moves look bigger than they really are. Don't read too much into a single burst of buying or selling on thin participation. Keep position sizes reasonable, stick to your plan, and let the tape show its hand before adding new risk.
Market Sentiment and Key Levels
Friday kept the bears in the driver's seat, but this time the pain landed in a different spot. Buyers made an early push that looked promising, then sellers faded it and capped price into the close, leaving SPY right back near where it started. Volume came in below average, so this wasn't a stampede for the exits. It was more of a slow leak as buyers stepped aside. The real story was where the damage showed up. The Dow sank 1.23% while the Nasdaq slipped just 0.21% and the Russell 2000 dipped 0.2%. That's a flip from Thursday's tech-driven selloff. Blue chips took the heaviest hit while growth and small caps held up relatively well, which tells us the selling is rotating around the market rather than piling into one corner. That keeps this from looking like a full-blown risk-off move, but it also means there's no clear safe spot for buyers to rally around. Hedges didn't offer much shelter either, as gold dropped 1.16% and Bitcoin eased 0.18%. Fear crept higher with the VIX rising 3.57% to 19.71, keeping the fear gauge pressed right up against the 20 mark for a second straight session. Bears hold a slight edge, but this is a grind, not a collapse.
SPY finished just a hair under first resistance at $760, still stuck in the $757 to $760 range that has defined recent trading. A clean break above $760 opens the door to $765, followed by $767 and $770 if buyers can finally take control. On the downside, losing $757 likely sends SPY toward $755, then $753 and $750. If $750 gives way, there is little to keep price from falling toward $745. Zoom out and the bigger picture still looks solid, with the long-term bull trend intact well above structural support at $640. That keeps this a broader dip-buying environment as long as key levels hold, but two straight down days with rising fear don't make a buy signal on their own. Monday's projected maximum range runs from $753 to $769, with the Put side dominating in an expanding band that points to trending price action mixed with intermittent chop. SPY closed near the middle of that range, leaving room for a move in either direction. The calendar is empty on Monday, with no economic news due out, so the market will trade on technicals and positioning rather than headlines. That can cut both ways, since a quiet tape can drift for hours and then snap hard once a key level breaks. Traders will want to see whether the weakness in blue chips spreads to tech and small caps, or whether the relative strength in those groups helps steady the broader market. Elevated yields and firm oil prices remain in the background as inflation worries, and either one could give sellers fresh ammunition. With SPY closing right at the top of its recent range and the Put side in charge, we favor shorting rallies near $760. Keep stops tight above $765, watch whether $757 holds early in the session, and let the bulls prove they can clear $760 with conviction before getting aggressive on the long side.
Expected Price Action
Monday's session brings actionable intelligence generated by our AI model, which projects SPY's maximum range at $753 to $769. With the Put side dominating in an expanding band, the model is calling for trending price action with intermittent chop. Monday's economic calendar is empty, so there is no data to jolt the tape, and price will trade on technicals and positioning. Friday's session was a classic fade. Buyers made an early push, but sellers capped the advance and dragged price back to where it started, leaving SPY tucked just beneath $760 and sitting slightly below the midpoint of Monday's projected range. That position in the lower half of the band, combined with the Put-heavy tilt, gives us a bearish bias heading into Monday. The VIX rose 3.57% to 19.71, keeping fear elevated and signaling that traders are still paying for protection rather than chasing strength. With the band expanding and the tape coiled in a tight sideways channel, a directional break out of the current zone looks likely, even without a headline to light the fuse.
The first test for Monday is $760, a round number sitting right on top of where SPY finished, and that's exactly where we favor shorting rallies since the Put side remains in control. A clean break above $760 opens the door to $765, with $767 and $770 standing as further resistance, though pushing that high would take real conviction from buyers on a day with no catalyst. On the downside, $757 is the first support to watch, and losing it likely sends price toward $755, then $753, the bottom of the model's projected range. Below that, $750 is the lowest support and the point of last hope for bulls. If $750 gives way, there is little to keep price from falling toward $745. The bigger picture is still healthy, with SPY trading well above structural support near $640 and the long-term bull trend intact, so this remains a dip-buying market on a broader timeframe. In the short run, the playbook is simple. A failed bounce into $760 sets up a short with $757 and $755 as the first targets, while a break of $757 could accelerate the slide toward $753 and $750. If buyers manage a firm push through $760 and hold it, step aside and let $765 prove itself before fading again. With no news to hide behind, whichever side wins the battle at $757 or $760 likely sets the trend for Monday's session.
Trading Strategy
The VIX rose 3.57% to 19.71, creeping right up under the 20 line as fear kept building and sellers stepped in to fade every push higher. With the Put side dominating an expanding band, keep size at roughly half to two-thirds of normal until the tape shows some direction. Keep stops in the 0.5-0.75% range from entry. Monday brings no economic news, so this will be a pure technicals day driven by positioning, and the trending action with intermittent chop the model expects means patience pays. Let the first 30 minutes play out before committing, and avoid getting trapped in the tight $757 to $760 zone that has defined recent trading, because that's exactly where the chop eats up accounts.
In a falling market scenario, shorting a rally into $760 is our preferred setup, and it fits perfectly with the model's bearish lean and price sitting at the top of its recent range. A tag of $760 that stalls and rolls over is the cleanest trigger, especially if the VIX pushes through 20 while price fails to gain ground. The first profit target is $757, with $755 next if sellers keep leaning on it. Runners can aim for $753, and $750 should be treated as a stretch target on a heavy trend-down day. Stops on shorts belong above $763, and aggressive traders can give it room up to just below $765. If price loses $750 with conviction, don't chase the flush. Short a failed retest of $750 from underneath instead, targeting $745 as the final stretch target. Scale out in layers into support rather than holding for the home run, because quick drops in this environment can reverse just as fast.
In a rising market scenario, buying a dip at $757 is the setup to watch on the bull side. A pullback that tags $757 and holds is the primary long trigger, particularly if the VIX starts to back off from the 20 area while price firms up. The initial profit target is $760, with $765 in play if buyers seize control. Stops on longs belong below $755, just under the next support shelf. If bulls break through $760 and hold it, buy a clean retest of $760 as support, targeting $765 and then $767 as a stretch target on a strong squeeze day, with the projected maximum at $769 acting as a hard ceiling. With puts still in charge, keep bull-side size at roughly half of the bear side unless $760 is reclaimed and held, at which point longs can take the lead. The long-term bull trend remains intact above $640, so dip-buyers will likely show up on deeper pullbacks. For now, the bears hold the edge as long as $760 caps the upside.
Model’s Projected Range
SPY's projected maximum range for Monday is $753 to $769, with the Put side dominating in an expanding band that suggests trending price action with intermittent chop. Monday brings no economic news due out so the market will trade on technicals. SPY closed at $759.96, down 0.52%, after opening at $759.90, pushing up to a session high of $763.47, and then fading to a low of $758.68 before settling right back near where it started. SPY remains in the $757 to $760 range that has defined recent trading, and with no fresh macro headlines on deck, price action is likely to be driven by positioning rather than news. Looking at Monday, the first test is resistance at $760, and a clean break above that level opens the door to $765, while a break below first support at $757 targets $755, and if the lowest support at $750 gives way, there is little to keep price from falling toward $745. 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 $760, $765, $767, $770, while support rests at $757, $755, $753, $750. With SPY closing right at the top of its recent range, we favor shorting rallies near $760. Bitcoin slipped 0.18% to close above $81,161, while the MAG stocks had a mostly red day led lower by Alphabet down 1.24%, with Microsoft the lone bright spot, up 0.66%. Sustained weakness across both leadership groups would be required to signal a deeper pullback. The VIX closed at 19.71, up 3.57%, suggesting elevated fear given that sellers faded the early push to the session high and kept a lid on price into the close. SPY continues to trade in a tight sideways channel just under resistance at $760, with the broader structural support level at $640 still far below.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended Friday in a Bearish Trending Market State with SPY closing at $759.96. Because SPY closed below MSI support, $762.53 now becomes resistance for Monday's session, with $765.47 MSI resistance above it. The MSI rescaled higher overnight but remained in a wide bearish state, and SPY did not respect the rescaling. Price fell through the new MSI support before the open and moved lower the entire day. Extended targets printed below virtually all day, which signified the herd's participation in another red day for the major indices. MSI support turned to resistance, the late-morning test of it held, and by the close SPY was near the day's lows with extended targets still printing below. SPY also remains well below its 50 DMA.
For Monday that implies further weakness. A wide bearish state with extended targets printing below into the close is the MSI's way of saying the sellers are still in control. A close at the lows of the week does not bode particularly well for the broader market, especially with earnings being quite strong to date.
Key Levels and Market Movements:
Thursday we stated, "Bulls want to see overnight price hold above $761.51 and stay near the $764.06 close," and added, "Bears want to see $761.51 fail with the MSI rescaling lower and extended targets printing below again," while also noting, "That would press SPY through Thursday's $761.17 low and into the premarket levels below." The bears got their wish before the opening bell. The MSI rescaled higher overnight to $765.47 resistance and $762.53 support, but it stayed in a bearish state, and SPY never respected the new range. Price fell through $762.53 in the premarket with extended targets printing below and opened at $759.90, under $761.51 and Thursday's $761.17 low in one shot. Sellers pressed through the morning to a session low of $758.68. Buyers then pushed back and lifted SPY to a session high of $763.47, but that was the test of $762.53 support-turned-resistance, and it held. Sellers took over again, extended targets kept printing below through the afternoon, and SPY settled at $759.96, near the day's lows and at the lows of the week.
Three trades followed, all on the short side. The first was selling the break of $762.53 MSI support at the open with extended targets printing below, targeting $760 and the premarket extended target beneath it, which SPY reached at $758.68. The second was selling the late-morning test of $762.53 support-turned-resistance once it held, targeting a return to $760. The third was selling the early-afternoon retest of the same level, which also failed, with price working back toward the lows into the close.
SPY fell 0.52% on volume of 30.61 million shares, below average and well off Thursday's heavier turnover, so the selling came with less intensity even as it kept pressing. The VIX rose 3.57% to 19.71, so fear is still building. It was a readable day 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:
Monday has light economic news, so the tape will key off Friday's weak close and the start of a heavy week of earnings from the mega-cap tech names. The MSI closed in a wide Bearish Trending state with extended targets printing below, which implies further weakness on Monday. With SPY closing below the range, $762.53 now acts as resistance, and $765.47 remains MSI resistance above it.
Bulls want to see overnight price hold above Friday's $758.68 low and stay near the $759.96 close. From there they need to reclaim $762.53 with the MSI rescaling higher and extended targets printing above, which would open a push toward Friday's $763.47 high and $765.47. Until that happens the bulls have nothing to work with. Bears want to see $762.53 hold as resistance and Friday's $758.68 low fail with extended targets printing below. That would press SPY toward the premarket levels below and $755 major support. With the VIX near 20 and SPY well below its 50 DMA, the bears have control.
The primary setup for Monday is selling a rally into $762.53 that fails, targeting the $759.96 close and then $758.68. If $758.68 breaks with extended targets printing below, sell rallies into that level while targeting the premarket levels below. In a wide bearish state with negative gamma, don't fight the trend. A failed breakdown below $758.68 that quickly reclaims the level offers a long back toward $762.53, but keep it small. If $762.53 is reclaimed with the MSI rescaling higher and extended targets printing above, it flips back to support, and traders can buy dips into it while targeting $763.47 and $765.47.
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 $760 to $785 and higher strike Calls and are not buying Calls at any strike, indicating little desire to participate in a rally on Monday. The ceiling for Monday appears to be $766 with a floor at $750. To the downside, Dealers are buying $759 to $700 and lower strike Puts in a 3:1 ratio to the Calls they're selling, displaying continued concern that prices could move lower. At the same time they are selling large quantities of OTM Puts at $750 and $755, indicating their belief that while price may fall further, there is a floor at $750 which will support price. $750 is the lower trend line of the current bull market and the September 17 low. The 200 DMA is much lower at $727, but recall SPY was at $727 at the end of July and staged a parabolic rally to establish new all time highs. It's quite possible this is setting up once again. Next week most of the heavyweight tech titans report, and it's likely the make or break for the market into year end. For Monday, $765 is major resistance with $755 as major support. This is a wide range which will likely hold on Monday. Above $765 is bullish and below $762 is bearish, with everything in between likely chop and traps. Gamma is strongly negative, so support and resistance are less apt to hold and the market will trend, therefore be careful with any mean reversion trades. Dealer positioning is unchanged at neutral/slightly bullish.
Looking Ahead to Next Friday:
Dealers are selling SPY $771 to $800 and higher strike Calls while buying $760 to $770 Calls, indicating the Dealers' desire to participate in any rally next week. They are buying ATM Calls to stay positioned for that upside. The ceiling for next week appears to be $783. To the downside, Dealers are buying $759 to $700 and lower strike Puts in a 5:1 ratio to the Calls they're selling. Dealers did not add to their protection on Friday, but they are heavily hedged, and a 5:1 ratio is the highest on record for the past five years per Bloomberg. While this may seem quite bearish, it may in fact be the opposite. The bull market has been running hot for four years and profits have exceeded historic norms, and protecting those profits is a wise investment for any long book. If the market continues to unravel, funds are protected. But if the market does not continue to fall, all of these bearish bets need to be unwound, and a massive short squeeze would emerge pushing SPY to new highs. It's far too early to tell, but the smart money has loads of protection on in case of a bear market, and even if they lose on these hedges, it's a tiny expense in an otherwise outstanding four year bull run. For next week, below $765 is bearish and above $770 is bullish, with the range in between being choppy and trap filled. SPY will find major resistance at $770, and while $760 is a major Put wall, with spot below that level into the close it also acts as resistance until it is overtaken. Negative gamma favors trending behavior with support and resistance failing to hold. For the week Dealer positioning is unchanged at 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 $760, targeting $757 and $755, with stops above $765.
With no economic news Monday, keep size light 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!
