Market Insights: Monday, October 27th, 2025

Market Overview

Stocks soared to fresh record highs on Monday as investor optimism surged ahead of this week’s pivotal Trump-Xi meeting and the upcoming Federal Reserve decision. The S&P 500 jumped 1.2% to close above 6,800 for the first time, while the Dow rose 0.7%, clearing the 47,300 level, and the Nasdaq led the advance with a 1.9% gain, also notching a new record close. Markets were buoyed by growing hopes that a U.S.-China trade agreement will emerge from Thursday’s meeting between President Trump and Chinese President Xi Jinping. Weekend comments from Treasury Secretary Scott Bessent and Chinese officials signaled real progress toward resolving the long-standing tariff dispute.

“We have a very successful framework for the leaders to discuss on Thursday,” Bessent said Sunday, while Beijing touted a “preliminary consensus” on key issues. That sentiment echoed President Trump’s remarks aboard Air Force One, where he expressed confidence in a deal and praised Xi. Risk appetite remained strong throughout the day, with equities rallying on both the trade headlines and expectations that the Fed will cut interest rates on Wednesday. Friday’s softer-than-expected CPI data further bolstered the case for easing.

Meanwhile, Qualcomm shares surged as much as 20% after the company announced a bold expansion into the data center space, unveiling new chips designed to compete directly with Nvidia and AMD. The broader market now shifts its attention to a stacked week of earnings from the Magnificent Seven, with Microsoft, Alphabet, and Meta set to report Wednesday, followed by Apple and Amazon on Thursday. With geopolitical tailwinds and dovish central bank expectations in play, bulls remain firmly in control heading into the heart of earnings season and a high-stakes policy decision.

SPY Performance

SPY opened at $682.73 and pushed higher throughout the session, reaching an intraday high of $685.54 before closing at $685.19, up 1.17% on the day. Volume came in slightly below average at 56.28 million shares, but the breakout above key resistance levels showed no signs of exhaustion. The strong close positions SPY near the top of its forecasted range, setting up a potential test of $686 and $688 in the next session.

Major Indices Performance

The Nasdaq led the charge with a 1.86% gain as tech megacaps rallied across the board. The S&P 500 rose 1.2%, and the Dow added 0.71%. The Russell 2000 underperformed with a 0.31% rise, but still closed higher, confirming broad participation. Strength was concentrated in large-cap growth, fueled by trade optimism and Fed expectations.

Notable Stock Movements

Qualcomm jumped as much as 20% on plans to expand its data center chip business, positioning itself as a direct challenger to Nvidia and AMD. Among the Magnificent Seven, all stocks closed in the green except for Netflix, which dipped a modest 0.01%. The rest of the group contributed meaningfully to the Nasdaq’s strong performance, with Microsoft, Meta, and Alphabet rallying ahead of their midweek earnings reports.

Commodity and Cryptocurrency Updates

Crude oil slipped 0.18% to $61.40, breaking below the $60 magnet level that has been a key target in our model. A further drop toward $50 remains a distinct possibility. Gold plunged 3.19% to $4,005, marking a sharp reversal as investors rotated into risk assets. Bitcoin rose 1.23% to close above $114,700, continuing its climb and confirming the market’s risk-on tone.

Treasury Yield Information

The 10-year Treasury yield eased slightly by 0.13% to close at 3.990%, maintaining a calm posture just below the key 4% level. While not yet threatening, yields above 4.5% would begin to weigh on equities, with 5.2% seen as the trigger for a potential 20% market correction. For now, yields support the bullish backdrop.

Previous Day’s Forecast Analysis

Friday’s forecast projected a maximum SPY range between $680.75 and $689.50, with upside targets at $683 and $685.25. SPY opened at $682.73 and followed the bullish roadmap precisely, hitting both targets and closing near the highs. The roadmap’s bias level at $680.75 was never seriously threatened, allowing traders to stay confidently long throughout the session.

Market Performance vs. Forecast

Monday’s action followed the model closely, with SPY respecting both structural and forecasted levels. Price held above the bias and cleared resistance in a late-session breakout. The alignment between model targets and actual price action validated the roadmap and provided clarity throughout the day.

Premarket Analysis Summary

Monday’s premarket noted a bullish gap and suggested upward continuation above $680.75. Targets were set at $683 and $685.25, both of which were achieved. The model also warned of limited headroom unless heavy buying emerged, which ultimately arrived late in the session as algos joined the bid.

Validation of the Analysis

Every aspect of Monday’s session validated the roadmap: bias held, both upper targets hit, and price closed strong. Traders who followed the MSI and roadmap were well-positioned for the late-day surge and had clear levels to manage risk and targets.

Looking Ahead

SPY’s projected range for Tuesday sits between $682 and $688. With no major economic data on the calendar, price will likely respond to earnings and headlines, particularly from China and the White House. Resistance is found at $686, $688, and $694. Support sits at $683, $682, $679, and $675. Bulls remain in control unless SPY breaks below $679, at which point a deeper backtest could develop.

Market Sentiment and Key Levels

SPY closed at $685.19, well above the bull/bear line of $670. The VIX dropped 3.54% to 15.79, its lowest close in weeks and a clear reflection of risk-on sentiment. Momentum remains overwhelmingly bullish, and with little overhead resistance, further gains are likely unless a surprise catalyst disrupts the trend.

Expected Price Action

Tuesday could open quietly but has the potential to build momentum ahead of Wednesday’s FOMC. If SPY holds above $682, bulls may drive a move toward $686 and $688. A loss of $680 could trigger a test of $679 or $675. Traders should watch for consolidation as earnings approach.

Trading Strategy

Stay long above $680 with targets at $686 and $688. Any dip to $679 or $675 should be bought unless there’s a breakdown below $673. Avoid chasing strength without confirmation, and keep an eye on headline risk related to tariffs or Fed commentary.

Model’s Projected Range

SPY’s projected maximum range for Monday sits between $680.75 and $689.50, with the Call side dominating in a narrowing band that suggests choppy price action with periodic trending bursts. Positive China tariff news sent the market soaring in another powerful “gap and go” session, with SPY closing up 1.18% at $685.24, just off record highs and right at major resistance. With no economic data on Tuesday, markets will likely continue reacting to earnings and headlines, with key reports due this week from Meta, Microsoft, Amazon, Apple, Google, Lilly, Visa, and Mastercard. Monday’s action was dominated by tariff optimism, with the overnight gap leading to a day of sideways consolidation followed by a strong late-session surge as buying algorithms kicked in. SPY’s close well above the $670 bull/bear dividing line reinforces bullish control, though average volume hints at potential digestion ahead of Wednesday’s FOMC decision and later economic data. Momentum remains overwhelmingly bullish, and fading this parabolic strength remains a losing proposition. Bears are sidelined until a clear catalyst shifts sentiment, with the first meaningful downside test coming only if $680 fails. A breakdown there could invite a gap fill attempt, though buyers are likely to defend aggressively, with $679 serving as potential intraday support. If bulls maintain control above $680, the next upside targets are $686 and $688, with little overhead resistance through $694. The broader path of least resistance remains higher, powered by persistent dip buying despite macro risks such as the government shutdown and tariff rhetoric. For Tuesday, resistance sits at $686, $688, and $694, with support at $683, $682, $679, and $675. Since reclaiming $585, SPY has sustained a durable uptrend, its bull channel from the April lows intact and guiding prices higher. Crypto and all Mag stocks rallied again, confirming a broad risk-on tone that continues to support equity strength. As we’ve stressed for weeks, until sustained weakness appears in leading equities and crypto, the larger trend remains firmly higher. Persistent softness in those assets could still trigger the 10–15% correction we’ve forecast into year-end, though with each passing week that window shifts toward early 2026. For now, the bulls are firmly in control, and price action continues to confirm it. The VIX fell another 3.54% to 15.79, signaling sustained risk appetite and sitting comfortably below the 23 threshold that would indicate stress. SPY closed mid-channel within its April bull trend, a structure that continues to support further upside momentum. 

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the day in a Bullish Trending Market State, with SPY closing right at MSI resistance. Extended targets printed from the premarket until the end of the day indicating the herd was participating in the day’s fun. The MSI rescaled higher over night on the gap up and then again in the last 20 minutes into the close, clearly indicating an MSI forecasting higher prices. For Tuesday’s session, expect continued strength with a potential push to as high as $694, although $686 and $687 will provide a significant hurdle to overcome. MSI support is $680.02 with resistance at $685.33.
Key Levels and Market Movements:
On Friday we wrote, “trade with the MSI and respond to what you see rather than trying to predict reactions. Tariff headlines and other administrative comments are likely to continue driving short-term market sentiment,” and noted, “the bulls have issued a clear “risk-on” signal, suggesting an all-clear,” while also stating, “The broader path of least resistance continues to point higher.” With this context, and with the MSI in a bullish state at the open with extended targets printing above in the overnight session, there was little to do but wait for a pattern or some way to get long. Unfortunately for us, that pattern never came as SPY chopped around MSI resistance until 1 pm when it pushed a bit higher. Again we were looking for a failed breakdown or other pattern to get long but it didn’t come. A late day breakout pushed SPY to another all-time high close we were unable to participate due to the risks going long and the inability to fade extended targets short. A no trade day for us, which we haven’t had in a long time. But it happens, especially in these extreme market conditions. No trade is a position and for us a win so we view this day as a solid day, even the wallet didn’t grow, thanks again a clear plan, disciplined execution, and strong alignment between MSI signals, our broader market model, and key technical levels. The MSI continues to prove its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Today’s report reads almost like a repeat of Friday’s, with the market continuing to grind higher on strong bullish momentum. Tuesday has no scheduled economic news, so it’s critical to trade with the MSI and react to what you see rather than trying to anticipate reactions. Tariff headlines and administrative commentary will likely continue to influence short-term sentiment, but with VIX pulling back sharply again, the bulls have reinforced a clear “risk-on” signal, implying an all-clear environment for now. Early in the week, the market is expected to move sideways and consolidate rather than extend sharply higher, though a break of today’s high remains possible. It’s unlikely SPY meaningfully exceeds $690 before Wednesday’s FOMC meeting, where volatility and larger moves are anticipated. The bulls remain firmly in control and will look to defend $680 overnight to sustain the next push upward, while bears need $679 and then $675 to fail to drive price below $670, a low-probability scenario absent a major catalyst. The broader path of least resistance remains to the upside, and with a close well above $670, bullish momentum continues to dominate heading into the FOMC. The MSI projects higher prices as well, and any dip toward $680 should be viewed as a buying opportunity in alignment with the ongoing uptrend. The key level for the broader bull market remains $640, and only a decisive break below that threshold would hand full control to the bears. Failed breakouts and failed breakdowns remain the highest-probability setups in this environment, and with major data releases hitting in the premarket, traders should stay flexible, avoid entries during Ranging Market States, and ensure full alignment with the MSI before acting. 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 $685 to $700 and higher strike Calls while also selling $679 to $684 Puts indicating the Dealers’ belief that prices may stall near today’s highs but will not drop below $682 on Tuesday. Dealers only sell ATM Puts when they are convinced the market will move higher and like Friday, today they were spot on. The ceiling for Tuesday appears to be $688. To the downside, Dealers are buying $678 to $600 and lower strike Puts in a 2:1 ratio to the Calls they’re selling displaying no concern that prices could move lower on Tuesday. Dealer positioning is unchanged from neutral to neutral.
Looking Ahead to Friday:
Dealers are selling SPY $686 to $705 and higher strike Calls while also selling $677 to $685 Puts indicating the Dealers’ belief that prices may stall near today’s highs but will not drop below $677. The ceiling for the week appears to be $700. To the downside, Dealers are buying $676 to $560 and lower strike Puts in a 5:1 ratio to the Calls they’re selling, reflecting a market that is hedged heavily given its’ lofty levels. This is not necessarily bearish, but instead with options relatively inexpensive, Dealers are fully hedged for what may come. We suggest any long book do the same. For the week Dealer positioning is unchanged from bearish to bearish but again Dealers have added lots of protection as SPY makes new highs almost daily. 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

Trade the roadmap. Long setups are favored above $680 with clear targets at $686 and $688. Use caution near $694 resistance and stay reactive to headlines. Until $673 fails, bulls remain in full control.

Good luck and good trading!