Market Insights: Tuesday, October 7th, 2025

Market Overview

Stocks pulled back from their record-setting streak on Tuesday, as the Dow, S&P 500, and Nasdaq each ended the session lower following a series of weak showings in the tech sector. The Dow fell 0.20%, while the S&P 500 dropped 0.36% and the Nasdaq led to the downside, slipping 0.67%. The selloff followed seven straight days of gains for the S&P and Nasdaq and came as Oracle shares slumped following disappointing cloud margin projections. This, along with declines in Tesla and Nvidia, pressured sentiment despite optimism surrounding AI and crypto.

Oracle fell 2% after being down as much as 7% intraday, following a report that its cloud computing profit margins were likely below Wall Street expectations due to surging chip and infrastructure costs. Tesla also weighed on the Nasdaq, losing 4% after unveiling a new Model Y priced below $40,000. The EV maker teased the launch through cryptic social media posts, but the reveal failed to impress investors. These developments briefly cooled enthusiasm around the AI trade, which had propelled stocks to new highs just one session earlier.

Meanwhile, Gold futures broke through $4,000 per ounce for the first time ever, as investors sought safe-haven assets amid political gridlock. The government shutdown, now into its second week, has already delayed the September jobs report and threatens to postpone next week’s CPI and PPI releases. As a result, markets are relying more heavily on corporate earnings and alternative data sources for clues on the economy. President Trump hinted at potential negotiations with Democrats over healthcare subsidies but also escalated threats against federal workers, keeping tensions high.

SPY Performance

SPY fell 0.36% to close at $669.17 after opening at $672.55 and trading between $667.67 and $672.99. Volume came in at 67.30 million shares, right at the average. The session followed the recent pattern of gapping higher premarket to new highs, followed by a selloff and intraday dip. SPY tested support at $668 before recovering some of the losses into the close. While bulls defended critical zones, the failed breakout above resistance was notable, and bears showed some signs of life for the first time in several sessions.

Major Indices Performance

The Nasdaq led the decline with a loss of 0.67%, weighed down by selling in Tesla, Oracle, and Nvidia. The S&P 500 dropped 0.36%, and the Dow slid 0.20%, hurt by a pullback in financials and telecom. The Russell 2000 underperformed with a loss of 1.19%, signaling risk-off behavior and profit-taking in small caps. The AI-led momentum trade took a breather, though broader trends remain intact.

Notable Stock Movements

Oracle dropped 2% after initially plunging 7% on reports that internal margins were under pressure due to heavy chip and data center investment. Tesla declined 4% on the launch of its new low-priced Model Y, which failed to inspire. Nvidia followed with a modest loss, and most of the Magnificent Seven traded lower, except for Amazon, which rose 0.40%, and Netflix, which gained 2.43%. Crypto-related names softened as Bitcoin declined, and traders rotated out of some high-flyers after multiple sessions of strength.

Commodity and Cryptocurrency Updates

Crude oil climbed 0.55% to close at $62.03, inching closer to our model’s longstanding $60 target. Gold surged 0.71% to $4,004, marking its first-ever close above the $4,000 threshold. Bitcoin dropped 2.62% to settle above $121,900, pulling back after a strong run but still within the broader uptrend. ETH held above $4,300, maintaining key support for now.

Treasury Yield Information

The 10-year Treasury yield dipped 0.77% to close at 4.134%. Though modestly lower, the yield remains in a range that supports equities, provided it stays below the 4.5% threshold. Levels above 4.8% would begin to cause concern, and 5% or higher could ignite a meaningful correction. For now, yields remain supportive, though markets remain on alert.

Previous Day’s Forecast Analysis

Monday’s roadmap anticipated a bullish range from $667.75 to $675.50, with upside targets at $672, $674, and $676.50 and support at $670.50, $669, and $668. The roadmap stated that a failure to hold above $672 could result in consolidation toward lower supports. While the outlook favored a bullish continuation, it also acknowledged the possibility of weakness if bias was lost.

Market Performance vs. Forecast

SPY opened above bias at $672.55, briefly climbed to $672.99, then failed at resistance and dropped sharply to a low of $667.67. Price recovered to close at $669.17. This aligned with the roadmap’s call for downside if bias was lost and confirmed $668 as a key level. Once again, the forecast highlighted the most critical price zones and the conditions that would trigger a shift, allowing traders to adapt accordingly.

Premarket Analysis Summary

Tuesday’s 6:51 AM premarket note emphasized the need to reclaim and hold $672 to open a path toward $674–$676.50, while noting that failure would likely lead to a consolidation toward $670.50, $669, or $668. The roadmap gave the edge to bulls but warned of risks if price couldn’t sustain the upward march. SPY followed the secondary scenario, losing $672 early and declining to $668 before bouncing. The premarket levels once again served as key inflection points.

Validation of the Analysis

Tuesday’s action validated the roadmap’s secondary path: failure at $672 leading to downside exploration. Support at $668 held as expected, and the roadmap helped traders anticipate and react to intraday shifts. Once again, the analysis proved accurate and actionable, providing traders with a clear structure to navigate the session.

Looking Ahead

Wednesday has FOMC minutes which is unlikely to move the needle. The market remains stuck in a range awaiting a catalyst. SPY continues to trade between $665 and $675, with bulls buying dips and bears fading strength. A breakout above $675 or breakdown below $665 would provide direction. Until then, expect chop. The FOMC minutes and jobless claims on Thursday may provide the next spark. The shutdown continues to loom large, and its duration could shift market tone.

Market Sentiment and Key Levels

SPY closed at $669.17, still well above the critical $663 level that defines bull control. Resistance is layered at $670, $674, $675, and $677. Support sits at $666, $661, and $656. So long as SPY holds above $663, bulls remain in control. Below $665, bears may gain confidence, but a break of $640 is still required for a trend reversal. Momentum remains with the bulls, though buyers appear more selective.

Expected Price Action

SPY’s projected range for Wednesday is $665 to $675, with the Put side dominating in an expanding band. This suggests choppy price action with potential spikes in either direction. If $668 fails, watch $665 and $661 as key supports. If $670 is reclaimed, a push toward $674 may follow. The structure remains bullish above $663, but price continues to test both ends of the recent range, setting the stage for a larger breakout or breakdown soon.

Trading Strategy

Continue to favor long entries near support zones at $666, $665, and $661. Targets to the upside include $670, $674, and $675. Failed breakouts near $674–$677 can be shorted with tight stops. Crypto weakness and tech softness suggest caution, but the trend remains up. The VIX rose 5.31% to 17.24, indicating mild concern. We continue to advise hedging gains and avoiding overnight exposure until volatility subsides.

Model’s Projected Range

SPY’s projected range for Wednesday sits between $663.25 and $674.25, with the Put side dominating in an expanding band that suggests choppy price action interlaced with periods of trending movement. With only FOMC minutes due tomorrow, there is little economic news to drive the market. As such, SPY continues to trade in a range between $665 and $675, waiting for a catalyst to break one way or the other. The market is likely to grind higher, testing both ends of this range to consolidate. Once again today, after making a new intraday all-time high, the market sold off as it has done in recent sessions, testing support at $668. This type of price action, driven by the bulls, is designed to lure bears back to the table, only to trap them and squeeze prices back toward new highs. SPY would need to close below $640 for these conditions to change. Today SPY closed down 37 basis points at $669.12, still well above $663, the level that defines bull control. Macro risks remain with the ongoing government shutdown, and the longer it persists, the greater the potential impact on the market. So far, investors have looked past these external threats, but an extended shutdown could eventually force a repricing of risk and compress multiples. Until we see signs of meaningful weakness, however, the trend remains higher with dips continuing to offer buying opportunities. Overnight, SPY gapped up, but after making a new premarket high, it sold off to $668, the same level identified yesterday as key support. The bulls defended that level, and by the close, much of the decline had been recovered. We’ve noted for several days that above $663, the bulls maintain complete control of the market. Today’s volume was just average with buyers remaining active on dips. While options data indicates institutions are heavily hedged, until SPY breaks below key levels, the trend remains bullish. We continue to buy dips while being very careful fading rallies. With the index well above the critical $640 threshold, bulls are likely to keep pushing prices to new highs while bears remain sidelined. Bears will grow more confident if SPY drops below $665. Should that level fail, the market could test $661, but if it holds, it will likely be another bear trap. A decisive break below $640 is needed to signal a true trend reversal and trigger our base case of a 10–15% pullback this year. For Wednesday, resistance sits at $670, $674, $675, and $677, with support at $666, $661, and $656. Above $674, there is a heavy wall of resistance that will likely limit gains. Since reclaiming $585, SPY has maintained a steady uptrend fueled by dip buyers. Mag stocks were mostly red today, with only Amazon and Netflix rising, while crypto and ETH moved lower, yet ETH remains comfortably above $4300, supporting the risk-on bull case. A sustained close below $4300, combined with continued weakness in Mag leaders, could point to early signs of market softness. Until then, the path of least resistance remains higher. We continue to favor quick profit-taking and caution with overnight holds. The VIX rose 5.31% to 17.24, suggesting the presence of mild weakness but continued market strength overall. 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 just 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 Ranging Market State, with SPY closing mid-range. There were no extended targets at the close but they did print above in the premarket and below at the $668 as this level was tested. The MSI spent the morning session in a narrow bullish state and then rescaled lower several times to a bearish state. A dip to $667.67 and without extended targets, SPY found a base and recovered into the close. For Wednesday the MSI is implying sideways to slightly lower prices. MSI support is $668.56 with resistance at $670.33.
Key Levels and Market Movements:
On Monday we wrote, “Absent a catalyst, it is likely the market continues to move higher but within a range from a low of $665 to a high of $675, with $668 acting as a magnet that will be tested as the bulls build energy to break out of this range,” and noted, “Dips to as low as $665 will trap bears,” while also stating, “the bulls want to defend no lower than $668, and if it holds, the market will continue to make new highs.” With this context, and with the MSI holding in a narrow bullish range overnight, the market continued to move higher with extended targets printing and a new intraday high forming. At the open, however, extended targets stopped printing and SPY set up a lower high that allowed us to enter short at $672.70 with a first target at MSI support at $671.21. With T1 secured, we set T2 at lower MSI support at $670.50, which was hit just after 11 am. With both targets achieved and our stop moved to breakeven, we had little to do but trail and see if SPY would reach the $668 level. It did, setting up a textbook failed breakdown, so we decided to bank trailer profits just below $668. We did not reverse long immediately, as extended targets were printing below. After waiting about an hour, SPY formed a second failed breakdown, convincing us to enter long at $668. We set T1 at the premarket level of $669, which was reached after 12:30 pm. The next level up was $670.50, which we set as T2. When the MSI rescaled to a wide ranging state, we lost conviction in the trade given the strength of the earlier selloff, so we moved our stop to breakeven to protect profits and entered profit protection mode, looking to exit T2. We decided to take profits at $669.25 and step aside for the rest of the day, accepting either a winning trailer or a scratch. Ultimately, the latter was realized as a dip back to our entry stopped us out. Two for two with 10% of our second trade flat was a win in any book, achieved once again through 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:
Wednesday has only FOMC Minutes, which are unlikely to move the market. As such, watch the MSI for clues and trade what you see, given the external risks currently facing the market. Absent a catalyst, it is likely the market attempts to reverse today’s decline and recover some of the lost ground. The market continues to trade in a range between $665 and $675, with $668 acting as a magnet that will likely be tested again as the bulls build energy to break out of this range. Dips to as low as $665 will trap bears, and the bulls will likely trigger another short squeeze to continue pushing prices higher. The market needs time to digest and consolidate recent gains, but any good news could easily break SPY out of this range and send it to new highs. Given the market’s strength, we will be very careful fading any pushes higher, making failed breakouts especially useful. Overnight, the bulls want to defend $668, and if it holds, the market will continue to make new highs. A break of $668 will likely lead to a test of $665, which is also expected to hold. With no meaningful news, watch the MSI and price action tomorrow for direction. We expect more two-way trading as we continue to buy dips at major support or short weakness at or near $673 on failed breakouts. 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 $673 to $690 and higher strike Calls while buying $670 to $672 Calls indicating the Dealers’ desire to participate in any relief rally tomorrow. The ceiling for tomorrow appears to be $674. To the downside, Dealers are buying $669 to $600 and lower strike Puts in a 4:1 ratio to the Calls they’re selling/buying displaying some concern that prices could move lower tomorrow. Dealer positioning is unchanged from bearish to bearish.
Looking Ahead to Friday:
Dealers are selling SPY $674 to $690 and higher strike Calls while buying $670 to $673 Calls indicating the Dealers’ desire to participate in any rally into Friday. Dealers are no longer selling ATM Puts. The ceiling for the week appears to be $680. To the downside, Dealers are buying $669 to $540 and lower strike Puts in a 4:1 ratio to the Calls/Puts they’re selling, reflecting a bearish outlook for the week. For the week Dealer positioning is unchanged from bearish to bearish. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders

SPY closed at $669.17, off its high but still within the broader bullish range. Watch for failed breakouts above $674–$675 and failed breakdowns below $666–$665. Use the roadmap, MSI, and Dealer positioning to guide trades. Stay nimble, protect gains, and avoid complacency. The trend remains higher until proven otherwise, but Tuesday’s action hints at potential cracks forming.

Good luck and good trading!