Market Insights: Thursday, October 2nd, 2025

Market Overview

US stocks extended their record-breaking rally Thursday as investors piled back into technology names on renewed artificial intelligence enthusiasm, shrugging off the continuing government shutdown. The Nasdaq rose 0.39%, the S&P 500 added 0.10%, and the Dow gained 0.17%, with all three major indices notching fresh all-time highs. The momentum was fueled by excitement around OpenAI, which reached a $500 billion valuation following an employee share sale, making it the most valuable startup globally and overtaking SpaceX.

The surge in AI optimism boosted chipmakers worldwide, with Nvidia climbing to a record high alongside AMD and SK Hynix. The AI trade continues to provide bullish momentum for markets even as shutdown risks persist. President Trump ramped up anti-Democrat rhetoric Thursday, threatening mass federal layoffs and cutting billions in funding to blue states. He met with OMB Director Russ Vought to finalize shutdown strategy, signaling the standoff will extend through the week at minimum.

The economic data calendar remains thin due to the federal data blackout. Friday’s scheduled jobs report is unlikely to be released, leaving investors reliant on private data. Challenger, Gray & Christmas reported that hiring plans have dropped to their lowest levels since 2009, while layoffs remain low—adding to the “low-hire, low-fire” narrative already supported by Wednesday’s ADP miss. Despite macro risks, markets remain laser-focused on the Fed, with traders nearly unanimous in pricing a rate cut at the October meeting. While the shutdown looms large, it has yet to rattle investor sentiment, and risk appetite remains elevated amid strong gains in both equities and crypto.

SPY Performance

SPY rose 0.10% to close at $669.11 after opening at $670.44 and trading between $666.79 and $670.56. Volume came in slightly below average at 53.71 million shares, as traders absorbed the prior session’s breakout. SPY gapped up to start the day, printed a new high early, then retraced toward support at $667. The dip was quickly bought, and the rest of the session was marked by tight consolidation. Despite the shallow move, bulls retained full control as SPY held above the key $663 level and continued to ride its October momentum.

Major Indices Performance

The Nasdaq climbed 0.39%, the S&P 500 added 0.10%, and the Dow rose 0.17%, all closing at new highs. The Russell 2000 led with a 0.60% gain, showing broadening participation outside of mega caps. The AI surge lifted tech shares, particularly in semiconductors, while the overall market benefited from bullish rotation and persistent dip-buying behavior.

Notable Stock Movements

Tesla dropped 5.11% despite reporting a record quarter of deliveries, as investor concerns shifted to the company’s future without federal EV tax credits. Microsoft and Netflix also declined slightly, while the rest of the Magnificent Seven traded higher. OpenAI's $500 billion valuation continued to ripple across tech, pushing chip stocks to new highs. Broader market breadth remained healthy despite some large-cap underperformance.

Commodity and Cryptocurrency Updates

Crude oil fell 1.70% to close at $60.73, bringing it closer to our model’s long-held $60 downside target. Gold slipped 0.44% to finish at $3,880 after recent strength. Bitcoin surged 2.85% to close above $120,800, extending its rally and providing further evidence of improving liquidity conditions and bullish sentiment across risk assets.

Treasury Yield Information

The 10-year Treasury yield fell 0.51% to close at 4.087%. Although yields remain above the “danger zone” of 4.5%, the recent pullback has relieved pressure on equities. A breakout above 4.8% would likely trigger market selling, while 5% or higher would spell real trouble. For now, subdued yields support the bull case and help keep equity volatility in check.

Previous Day’s Forecast Analysis

Wednesday’s model projected a range of $665 to $673.25, with the Call side dominating and upward consolidation expected. The roadmap favored continuation above $668, targeting resistance levels at $670 and $672. Premarket guidance warned of consolidation if SPY slipped below $668.45, with support at $667 and $665.45. The model also emphasized strong bullish momentum provided $668 held.

Market Performance vs. Forecast

SPY opened above the bias level, tagged $670.56 early, and then retraced to $666.79 before closing at $669.11. The session played out exactly as forecasted, with early strength followed by consolidation near support and a controlled close. While SPY remained flat overall, the intraday movement respected all key levels and reinforced the model’s bullish tilt.

Premarket Analysis Summary

Thursday’s premarket report, published at 8:03 AM, set $668.45 as the bias level and noted upside targets at $671 and $672.45. It called for continued gains provided SPY remained above bias, with strong rally potential from $667 support. A dip to $665.45 was flagged as low probability. The market followed the script closely, validating the roadmap and maintaining bullish posture into the close.

Validation of the Analysis

SPY respected all key roadmap levels, reacting predictably at $667 and failing to break down below bias. Though the move was modest, the structure confirmed the roadmap’s expectations. The consolidation phase also aligned with the MSI’s Ranging/Bullish state, affirming that bulls still held the upper hand but the market needed to digest recent gains.

Looking Ahead

Friday’s session hinges on whether the jobs report is released. With the shutdown ongoing, it’s unlikely we’ll see data, which may dampen volatility. SPY remains above key breakout levels and continues to make new highs, but a cooling period could set in. Bulls are in control above $663, with room to stretch toward $675 if $670 and $672 are cleared. A break below $665 could open the door to $663 or $660, though downside remains limited unless momentum meaningfully shifts.

Market Sentiment and Key Levels

SPY closed at $669.11, above all key support and within reach of the $670–$673 resistance band. Resistance now sits at $670, $672, $675, and $678. Support is found at $665, $663, and $660. Bulls have a clear edge as long as $663 holds, with bears only regaining control below $660. The market continues to ignore shutdown risks for now, and buyers remain firmly in charge.

Expected Price Action

SPY’s projected range for Friday is $663.75 to $673.75, with the Call side dominating a steady but narrow band. Price action is expected to be choppy but directional, with bulls aiming to consolidate gains or trap shorts to fuel another squeeze. If SPY clears $672, a push toward $675 becomes more likely. Support at $665 and $663 remains crucial for dip buyers. While volume has been below average, the trend remains strong. Any close below $663 would begin to weaken the bull case.

Trading Strategy

Longs remain favored above $665, with buy zones at $663 or $660. Targets include $670, $672, and $675. Shorts may be attempted near $675–$678 on failed breakouts. The VIX rose 2.09% to 16.63, slightly elevating caution levels. We continue to recommend protective hedging and quick profit-taking. Market complacency remains high, but volatility could spike if sentiment sours. Stay nimble.

Model’s Projected Range

SPY’s projected range for Friday sits between $663.75 and $673.75, with the Call side dominating in a steady but narrow band that suggests choppy price action interlaced with periods of trending action. With only the monthly jobs report due tomorrow, which is unlikely to happen due to the shutdown, the market is likely to fill out the zone between $665 and $670 in an attempt to trap shorts to create another squeeze. Another new all-time high and new high close for the markets and the bulls continue to rule, with SPY closing at $668.92. While this shutdown is more serious than others in the past, the market continues to be oblivious to these macro risks, which will not end well, and at some point the market will take these external threats into consideration and multiples will contract. But until we see signs of weakness, it’s higher and higher we go until the balloon pops. Overnight SPY gapped up and made a new high just before the open, then pulled back to $667, and once again the dip was bought, leaving SPY basically flat on the day, down just 12 basis points but firmly above both the $660 breakout level and the $663 level where we noted bulls resume full control of the market. Volume was below average, which doesn’t support today’s break to new highs. But with a strong start to October, we are back to buying dips while being very careful fading rallies. With the index well above the critical $645 threshold and dips consistently bought, bulls are likely to continue pushing the market to new highs, while bears are back sleeping as they need to move SPY below $665 to even consider playing. Should that level fail, the market likely drops to $663 and even $660. Yet a decisive break of $640 is required to signal a true shift in the market and trigger our base case of a 10–15% pullback this year. For Friday, resistance sits at $670, $672, $675, and $678, with support at $665, $663, and $660. Since reclaiming $585, SPY has held a steady uptrend fueled by dip buyers. Mag stocks were mixed to higher today with only Tesla, Microsoft, and Netflix falling while the others rose, while ETH moved strongly above $4300, supporting the risk-on bull case. A sustained close below $4300 combined with weakness in Mag leaders would point to market softness, but until that happens the market will move higher. We continue to favor quick profit-taking and caution with overnight holds. The VIX rose 2.09% to 16.63, suggesting continued market strength, and we still recommend adding protection to any long book, as VIX below 23 supports the bullish case but a breakout above it could finally trigger the long-anticipated pullback. SPY closed well above the redrawn lower bull trend channel from the April lows, reinforcing the bull trend.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the day in a Bullish Trending Market State, with SPY closing just below MSI resistance. There were no extended targets all day, but a few did print in the premarket. The MSI spent virtually the entire day in a bullish state after rescaling higher overnight. A brief dip around 11 am saw the MSI rescale to a ranging state which did not last long. The dip was bought and the MSI resumed its current bullish state. For Friday the MSI is implying a drift higher potentially but one which is likely to trade within a range from $665 to $670/$671. MSI support is $667.68 with resistance at $669.89.
Key Levels and Market Movements:
On Wednesday we wrote, “with a close above $668 the market heavily skews to the bulls,” and noted, “Generally we believe the market may consolidate or retrace, but given the strength we are going to be very careful fading any pushes higher,” while also stating, “Overnight the bulls want to defend no lower than $661, and if it holds once again, the market will continue to make new highs.” With that context, and with the MSI rescaling higher overnight with extended targets above, we waited for price to pull back before going long given the extended targets kept us from shorting the highs. SPY dipped to MSI and premarket support and set up a textbook failed breakdown at $667, so we entered long and set our first target at MSI resistance at $669.88. Price moved back up but its ascent was slow, so we decided to adjust our first target to the premarket level of $668.45 given it was more than $1 from our entry. With T1 in hand we set T2 at MSI resistance at $669.88. SPY got very close to our second target but didn’t quite reach it, so we took off T2 a few pennies lower and moved the stop to breakeven, exiting the trade at the close at $669.22. It was not an easy day to trade, but that was to be expected after the massive short squeeze we just witnessed the last few days. But once again, one and one done thanks to a clear plan, disciplined execution, and strong alignment between MSI signals, our broader market model, and key technical levels. The MSI continues to be a cornerstone of our consistent trading process.
Trading Strategy Based on MSI:
Friday’s jobs report is likely cancelled so without any real news, the market will continue to drift higher while consolidating along the way. Absent an external shock, with a close above $669 the market heavily skews to the bulls. The market needs time to digest and consolidate, so it’s probable price moves in a range between $665 and $671 to build energy for another push higher. Given the market strength we will be very careful fading any pushes higher, making failed breakouts especially useful in this instance. Overnight the bulls want to defend no lower than $665, and if it holds once again, the market will continue to make new highs. A break of $665 will likely lead to $663 and perhaps $660, though this remains a low-probability event. As such, watch price action tomorrow and look for the MSI to provide direction, with expectations for more two-way trading as we continue to buy dips at major support or short on weakness at or near $670 on a failed breakout, remembering that the bears come to life in scale only on a drop below $640. As always, failed moves remain among the highest-probability setups. Stay nimble, avoid trades during Ranging Market States, and ensure full alignment with MSI. Providing real-time insights into market control, momentum shifts, and actionable levels, the MSI when integrated with our Pre-Market and Post-Market Reports continues to sharpen execution precision and elevate trade quality. If you haven’t yet integrated MSI and our model levels into your process, now is the time. Contact your representative to get started as these tools are designed to support consistency and enhance performance.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling SPY $670 to $680 and higher strike Calls implying the Dealers belief that prices may stall at current levels on Friday. The ceiling for tomorrow appears to be $672. To the downside, Dealers are buying $669 to $600 and lower strike Puts in a 3:1 ratio to the Calls they’re selling/buying displaying little concern that prices could move lower tomorrow. Dealer positioning is unchanged from slightly bearish/neutral to slightly bearish/neutral.
Looking Ahead to Next Friday:
Dealers are selling SPY $670 to $690 and higher strike Calls while selling $667 to $669 Puts implying the Dealers belief that prices may tread water near current levels but not all below $667. Dealers only sell ATM Puts when they believe prices will move higher. The ceiling for next week appears to be $682. To the downside, Dealers are buying $666 to $540 and lower strike Puts in a 3:1 ratio to the Calls they’re selling, reflecting a bearish to neutral outlook for the week. For the week Dealer positioning is unchanged from slightly bearish/neutral to slightly bearish/neutral. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders

SPY closed at $669.11, maintaining bullish control. With momentum strong and resistance layered just overhead, continue favoring dips while respecting resistance zones. Stay alert for shutdown headlines and be ready to pivot if sentiment changes. Tight stops, quick exits, and tactical patience will remain key.

Good luck and good trading!