Market Insights: Tuesday, November 3rd, 2026
Market Overview
Stocks finished mixed Tuesday as Americans headed to the polls for the midterm elections and Wall Street braced for more AI earnings. The Dow fell more than 0.4%, but the S&P 500 edged up 0.4%, and the Nasdaq advanced almost 0.8% as chip stocks bounced back after a rough session. Advanced Micro Devices (AMD) and Super Micro Computer (SMCI) both report after the bell, giving investors a fresh look at AI demand at a shaky moment for the trade. As Intel (INTC) showed last week, the market's reaction will likely hinge as much on fourth-quarter guidance as on the latest quarter's results. Super Micro comes in under extra pressure after the stock sank a staggering 27% over the past month, following a Gartner report predicting that 80% of neocloud companies will shut down by 2030 because they can't earn a return on invested capital. Apple (AAPL) fell after its own earnings report, which included bright spots like iPhone sales but missed on Greater China revenue. Palantir (PLTR) also slid despite beating expectations. On the economic front, the Labor Department's JOLTS report showed job openings and hiring barely changed in September, extending the labor market's "low hire, low fire" pattern. Oil dropped for a second straight day as investors priced in better odds of a diplomatic resolution to the US-Iran conflict, though it trimmed losses by the afternoon. Brent crude fell less than 1% to hover near $104 per barrel, while WTI traded near $96.
Tonight, investors will be watching election results and ballot initiatives for clues on policy changes affecting pharmaceuticals, housing, and AI data centers. Polls and prediction markets have pointed to a Democratic sweep for weeks. Polymarket gave Democrats a 76% chance of winning both chambers as of Tuesday morning, with a Democratic House and Republican Senate a distant second at 19%. The House looks like the safer bet, but the Senate is where the drama lives. Republicans hold it 53-47, Democrats need a net gain of four seats, and some races may not be called tonight. History suggests the outcome tends to move stocks for about three months and then barely at all. Crypto remained a mess. The total crypto market value rose slightly to $2.6 trillion, but Bitcoin (BTC-USD) was down more than 3% around $77,600 as of noon ET, and investors pulled over $1 billion from US-listed bitcoin exchange-traded products in the two business days after last Thursday's record Binance hack. Binance revealed the hackers spent weeks posing as recruiters and fake executives, running two rounds of interviews in which a phony HR rep shared social media details to build trust before a supposed CEO of a fake company got an engineer to download malware disguised as an interview assessment. That was just one stage of a campaign that started in June, when another engineer downloaded a tampered software installer, and more employee devices were compromised before the hackers reached systems that authorize wallet transactions. The FBI said over the weekend that North Korea was behind the attack, which the regime denies, and Binance said it has fended off 57 suspected North Korea-linked cyber threats this year. Meanwhile, crypto brokerage K33 flagged a split in derivatives, with CME bitcoin futures open interest at its lowest since October 2023 while perpetual futures open interest sits at a three-month high. K33 head of research Vetle Lunde told clients that no matter how the midterms shake out, bitcoin is "rigged for a major move."
SPY Performance
SPY opened at $752.73, a small gap up from yesterday's close of $752.15. The bulls didn't get much of a head start, but for once they didn't waste what they had. SPY dipped to a session low of $752.41 right after the open, barely below where it started, and that turned out to be the floor for the day. It stayed comfortably above yesterday's low of $751.60 and well clear of $750.36, the line in the sand we flagged. From there, buyers grinded SPY up to a session high of $757.07. That fell well short of yesterday's high of $763.85, the first hurdle we said the bulls needed to clear, so this was hardly a breakout. SPY finished at $754.44, holding most of its intraday gain and closing above its open.
SPY gained 0.31%, a modest move, but it snapped an important pattern. After two straight sessions where sellers controlled regular trading hours and SPY closed below its open, today the bulls finally held a gain into the close. The low came early and never got retested, which is the opposite of the fade-into-the-lows action we've been seeing. That's a small win. The catch is volume. Only 28.96 million shares changed hands, below average and a big drop from yesterday's already middling turnover. Buyers stepped in, but they did it quietly, and a bounce on light volume doesn't carry the same weight as one backed by real conviction. The VIX eased off, dropping 1.99% to close at 20.73. That's a step in the right direction, but it's still sitting above 20, which tells you traders aren't ready to give up their protection just yet.
The bears haven't lost control, but they took the day off. Yesterday's low of $750.36 remains the key support level, and today's low of $752.41 adds a closer line to watch. A drop below either one would erase today's progress and put sellers right back in the driver's seat. On the upside, today's high of $757.07 is the first test, followed by $763.85, $764.44, and $766.62. The bulls need to reclaim that cluster before anyone can call a bottom. Today's higher close and steady intraday climb lean slightly bullish, but thin volume and a VIX still above 20 keep the bigger picture cautious. Expect more choppy trading until buyers show up in force. Yesterday the bulls couldn't patch the crack, and today they at least managed to keep it from getting wider.
Major Indices Performance
The Nasdaq led the pack with a 0.83% gain, snapping its three-session losing streak and reminding everyone that tech can turn on a dime. Bargain hunters stepped back into the megacap names that had been getting hammered, and a strong rebound in one of the biggest software leaders did a lot of the heavy lifting. After days of relentless selling, the bounce was overdue, and buyers clearly saw value in the market's largest growth names. The question now is whether this is the start of a real recovery or just a relief rally before the next leg lower.
The Russell 2000 came in second with a 0.35% gain, stacking a second straight positive session and building on yesterday's modest bounce. Small-caps continued to find support as investors spread their bets beyond the market's biggest names. With crude barely budging, smaller domestic companies got a break from the energy-cost swings that have weighed on them lately. Gaining ground on both a rotation day and a tech rebound day shows small-caps are earning steady interest from buyers.
The Dow brought up the rear with a 0.38% decline, giving back its prior session's gain as money flowed out of defensive blue chips and back into growth. The same industrials, financials, and safe-haven names that sheltered investors yesterday became the funding source for today's tech rebound. When risk appetite returns, the Dow's old-economy makeup tends to lag, and that's exactly what happened. The S&P 500 landed between the Russell 2000 and the Dow, lifted by its heavy tech weighting. The VIX dropped 1.99% to close at 20.73, easing fear slightly but still sitting above the key 20 level. With the ISM Services PMI on Wednesday's calendar, traders have a major catalyst that could decide whether tech's comeback has legs or the defensive trade takes over again.
Notable Stock Movements
Microsoft was the biggest mover in the Magnificent Seven once again, but this time it was for all the right reasons. The software giant jumped 2.74% to lead the group higher, a sharp turnaround after it led the losses last session. That kind of bounce matters because Microsoft is one of the steadier names in the group, the stock investors usually trust when the market gets choppy. When the defensive heavyweight goes from leading the way down to leading the way up in a single session, it tells you buyers were waiting on the sidelines for a better entry point and weren't shy about stepping back in.
The group finished mostly green, snapping that four-session streak of mostly red days. The only exceptions were Tesla and Apple, with Apple taking the biggest hit after sliding 1.90%. Tesla's dip is worth noting since it was one of the bright spots last time, so its momentum didn't carry over. Still, this is a big improvement from the past several sessions, when the group couldn't string together any real strength. Having the majority push higher instead of just one or two names suggests confidence in big tech is starting to come back. Apple will need to find its footing, though, because a lagging heavyweight can weigh on the group if the weakness sticks around.
The broader market flipped the script from last session's rotation. The Nasdaq climbed 0.83% as tech found buyers, and the Russell 2000 added 0.35%, while the Dow slipped 0.38%. That's basically the reverse of last time, when money moved out of tech and into the Dow's more traditional names. The VIX dropped 1.99% to 20.73, which shows fear easing a bit, but it's still hanging above that key 20 level that separates normal jitters from real worry. Wednesday brings the ISM Services PMI at 10:00 AM ET, and that report could shake things up early in the session. If Microsoft keeps its momentum and Apple stabilizes, big tech could turn this into a real recovery. But if the data disappoints and the VIX climbs again, today's bounce could fade quickly.
Commodity and Cryptocurrency Updates
Crude oil barely budged, edging up 0.12% to close at $96.58. After the prior session's violent selloff, the black gold found its footing and steadied just below the $100 mark it lost earlier in the week. The quiet session suggests the wave of profit-taking may be running out of steam, though buyers weren't aggressive enough to spark a real rebound. Crude remains well above $70 and continues to defy longer-term model expectations, with geopolitical tensions and supply disruptions still keeping a firm floor under prices. Wednesday's ISM Services PMI could offer fresh clues on the demand side, while energy traders will keep a close eye on supply headlines. A sustained move this far above $70 keeps inflationary pressure front and center and could complicate Fed policy if energy prices stay elevated.
Gold gave back ground, slipping 0.95% to close at $3,932. That erases a good portion of the prior session's bounce and pushes the yellow metal further below the key $4,000 level. With fear easing a bit across the market, some of the safe-haven demand that fueled the rebound appears to have cooled off. The long-term case still has support from inflation uncertainty, steady central bank buying, and ongoing geopolitical tensions. Still, bulls failed to build on their recovery attempt, and that keeps sellers firmly in the conversation. Reclaiming $4,000 remains the key test for showing the recent drop was a flush rather than the start of a deeper correction, while continued weakness would raise the risk of another leg lower.
Bitcoin bounced back, rising 1.45% to close below $77,792. That snaps a three-day losing streak and recovers some of the recent damage, though the crypto remains stuck below the $80,000 psychological level that had anchored the base-building story. A better tone in tech helped lift risk appetite, and Bitcoin rode along, once again showing it trades like a risk asset tied to overall sentiment. One green day isn't enough to declare the pullback over, but it does give bulls something to work with. With the ISM Services PMI on Wednesday's calendar, Bitcoin will likely take its cues from how markets react to the data. Bulls need a push back above $80,000 to repair the damage, while a failure to follow through would put the downtrend back in control.
Treasury Yield Information
The 10-year Treasury yield jumped 1.19% today to close at 4.950, snapping a three-day losing streak and erasing much of the progress bond buyers had made toward the 4.8% line. Yesterday's drop gave the market hope that rate pressure was finally loosening its grip, but today's reversal is a reminder that the 10-year hasn't left the danger zone. The move pushed yields right back toward the 5% level that broke last week, and it puts the burden back on stocks to prove they can handle borrowing costs this elevated.
Measured against each threshold, the picture took a clear step backward. The 4.5% level where equity valuations start to feel the squeeze is now 45 basis points below today's close, and the 4.8% mark that usually triggers broader selling slipped further out of reach at 15 basis points away. The bigger concern is the 5% serious-risk flag, which now has just 5 basis points of cushion, down from 11 yesterday. The gap to 5.2%, where the framework calls for a 20% or greater correction, narrowed to 25 basis points, pulling the worst-case scenario closer than it was a day ago.
The equity reaction showed exactly who feels rising rates the most. The Dow slipped 0.38%, giving back yesterday's gains as value names felt the pinch of higher yields. The Nasdaq rose 0.83% and the Russell 2000 added 0.35%, so growth stocks and small caps managed to shrug off the rate move for now, but that kind of resilience tends to fade fast if the 10-year pushes through 5%. The safe-haven bid also cooled. The VIX dropped 1.99% to 20.73 and gold fell 0.95% to $3,932, which suggests today's bond selling was less about fear unwinding and more about investors demanding higher yields. Crude edging up 0.12% to $96.58 didn't help. After yesterday's steep plunge, oil's failure to keep falling leaves inflation expectations sticky, and that removes one of the main forces that had been pulling yields lower.
Wednesday brings the ISM Services PMI at 10:00 AM ET, and with the 10-year sitting this close to 5%, it's a high-stakes report for bonds. Services have been the stickiest part of inflation, so a hot reading, especially in the prices component, could send yields straight through 5% and spark real pressure on stocks. A softer number would give bond buyers a reason to step back in and push the 10-year back toward 4.9% or lower. The level to watch has shifted to 5%. A close above it would put the market right back in serious-risk territory, while holding below it keeps the door open for another run at 4.8%.
Previous Day’s Forecast Analysis
Heading into Tuesday, our AI model projected a maximum SPY range of $744 to $762, with the Put side dominating an expanding band and trending price action with intermittent chop expected. The forecast carried a bearish bias, driven by Monday's fade leaving SPY below the middle of the projected range and hovering just above first support at $750. The VIX had risen 9.42% to 21.25, and with JOLTS Job Openings at 10:00 AM ET followed by Congressional Elections at 10:16 AM ET, the model flagged early volatility and headline-driven swings. The key battleground was the $750 to $755 zone. $755 was first resistance, with $757, $759, and $762 above it. On the downside, losing $750 was expected to open the door to $745, then $740, and finally $736 as the last line of defense for bulls, with a break there exposing $730. The broader bull trend was still considered intact above structural support near $640.
The recommended approach called for half-size positions through the first hour and stops in the 0.75-1% range given elevated volatility. The favored trade was shorting a failed rally into $755 to $757, targeting $750 and $745, with $744 as a stretch target and stops above $759. Aggressive traders could tighten those stops to just above $757. If $745 broke with conviction, the plan was to short a failed retest from underneath, targeting $740 and $736 with stops above $750. On the bullish side, buying a dip at $750 that held was the top long setup, targeting $755, $757, and $759, with stops below $744. A reclaim of $759 would have flipped the script, setting up a retest buy targeting $762 with stops below $757. The bottom line was that bears held short-term momentum as long as $755 capped the upside.
Market Performance vs. Forecast
Tuesday's session played out entirely inside the model's projected maximum range of $744 to $762, with price never testing either boundary. SPY opened at $752.73, pushed to a high of $757.07, dipped to a low of $752.41 and closed at $754.44, up 0.31%. The forecast called for a bearish bias, and while buyers managed a modest gain, they never broke free of the resistance zone the model had mapped. The model expected trending price action with intermittent chop, and the tight trading range showed the chop side of that call. JOLTS Job Openings and the Congressional Elections were flagged as the catalysts that could stir up early movement. The model does not account for unpredictable external events, and the political backdrop kept traders cautious and the tape contained rather than producing a decisive trend in either direction.
The key levels did their job. The forecast named the $750 to $755 zone as the key battleground, and price spent the entire session inside or just above that zone. The $750 first support was never seriously tested, with the session low holding well above it and leaving the deeper downside levels at $745, $740 and $736 untouched. On the upside, the push to $757.07 tagged the $757 resistance almost to the penny and stalled right there, confirming the model's map of where sellers were waiting. The forecast said the bears hold short-term momentum as long as $755 caps the upside. Bulls poked above $755 during the session but couldn't hold it into the close, finishing just beneath that gate. The $759 level that would have flipped the bearish lean was never reached.
On the falling market side, the favored short at a failed rally into $755 to $757 set up right where the playbook described. Price pushed into that zone, stalled at $757 and rolled back below $755 into the close. Stops above $759 were never threatened, while aggressive traders using tighter stops just above $757 saw that level tested and risk management protocols protected capital. The confirmation signal of the VIX holding above 21.25 did not fire, which argued for patience and lighter conviction on the short side, and the $750 target stayed out of reach. On the rising market side, the favored $750 dip-buy never activated because the session low stopped short of that level. The breakout setup above $759 also stayed dormant, so no capital was put at risk there. The guidance to start longs light and add only once the tape confirmed direction kept traders from chasing a range-bound session.
The VIX dropped 1.99% to 20.73, easing slightly but staying above the 20 mark, which kept a layer of caution in place throughout the session. Volume ran below average, reflecting a market in wait-and-see mode rather than one committing to a trend. The advice to cut size in half through the first hour and let the data and headlines settle proved sound on a day that offered little follow-through in either direction. The range boundaries held, the $757 resistance capped the rally precisely, and the $750 support was never challenged. The framework adapts as conditions shift, and Tuesday showed how well-mapped levels keep traders disciplined even when the tape refuses to pick a side. With the long-term bull trend intact above structural support near $640, the framework remains a reliable guide for managing risk and capturing opportunity in either direction.
Premarket Analysis Summary
The premarket analysis, posted before the opening bell, set up Tuesday's session with SPY at $751.60 in a put-dominated tape, holding just above $750 after Monday's bounce faded under $760 and closed at new lows for this pullback. The bias hinged on $755, the defining level and the gate overhead where the tape would begin to repair. Reclaiming and holding it would mark Monday's close as the low, while failing there would send price back to test $750. The expected move ran from $741 to $758, about eight points and the widest in a month, and the notes warned that in a put-dominated tape swings accelerate once a level gives. Upside targets stepped through $753 as the first step out of the pocket, then $757 as the next decision point, $758 as the top of the expected move, and $760 as max upside, a major round number, Friday's break level and the level bulls really needed. On the downside, $750 was the line in the sand, where Friday's selling stopped and the heaviest two-way battle on the board. Below that sat $748 as the next decision point, $745 as the point of last hope and heavy support, and $741 as max downside at the bottom of the expected move.
Only the upper half of the map came into play. SPY opened at $752.73, just under the $753 first target, and buyers defended the open, with the low of $752.41 never threatening the $750 line in the sand. Price then cleared $753 and pushed through the $755 gate to a high of $757.07, tagging the $757 decision point before stalling short of the $758 expected move top. That was where the rally ran out of gas, and SPY slipped back beneath the gate into the close, finishing at $754.44, up 0.31% on 28.96M shares of below-average volume. The VIX dropped 1.99% to 20.73, a modest easing of fear but still elevated. The key takeaway is that bulls won the first battle by defending $750 and reclaiming the gate, but they couldn't hold it into the bell, and the light volume showed little conviction behind the move. Bulls now need a close above $755 and then a push through $758 to set up the real test at $760, while a loss of $750 would still open the door to $748 and $745.
Validation of the Analysis
Tuesday's session tracked the premarket map closely, with SPY respecting the floor beneath it and running straight into the decision point the notes flagged overhead. The notes were written with spot at 751.60, and SPY opened at $752.73, $1.13 above spot and 27 cents below $753, "the first step out of this pocket." The big question coming in was whether $750, "our line in the sand," would hold. It never came close to breaking. SPY's session low was $752.41, holding $2.41 above that level. It also stayed above Monday's close, which fits the notes' bullish scenario that "yesterday's close was the low." With the floor secure, buyers went to work on the upside staircase.
SPY cleared $753, then pushed through $755, "the gate above us and where the tape begins to repair." From there the notes said "757 then 758 come quickly," and $757 arrived right on cue. The rally topped at $757.07, just 7 cents through $757, "the next decision point," and 93 cents shy of $758 at the top of the expected move. The decision at $757 was clear. Price stalled there and drifted back. SPY closed at $754.44, up 0.31%, finishing 56 cents below the $755 gate. That close tells the story. The tape began to repair, but it didn't fully hold the gate into the bell, so the next session starts right at the pivot the notes called defining. The entire range stayed comfortably inside the 741 to 758 expected move. Because no level gave way on the downside, the put-dominated acceleration the notes warned about never kicked in. The VIX dropped 1.99% to 20.73, and below-average volume pointed to a calm repair session rather than a forceful reversal.
The trading value came from knowing where the floor was and where the ceiling sat. The first setup was the long once $753 cleared above a defended $750. That gave traders a mapped path through $755 to $757 and a clean 4-point move with risk tucked under the lows. Traders who waited for confirmation on the $755 reclaim still caught a quick 2-point run to the decision point. The second opportunity was the fade at $757. With $758 capping the expected move and $760 the "heaviest resistance overhead," there was no reason to chase. Shorting the stall delivered a pullback of more than 2.5 points back under the gate into the close. The map also kept traders disciplined on the other side. With $750 never threatened, there was no reason to press shorts toward $748 or $745. A session that defended the line in the sand, climbed level by level, and turned exactly at the decision point shows how precisely these levels framed the day. Heading into Wednesday, bulls need a firm reclaim and hold of $755 to open $757, $758, and the real test at $760. Bears need to push price back through $753 and finally crack $750 to put the lower targets in play.
Looking Ahead
Wednesday's main event on the economic calendar is the ISM Services PMI at 10:00 AM ET, a medium-impact release that tracks the health of the services sector, the part of the economy that drives most American spending and hiring. There's no pre-market data on deck, so the opening stretch will likely be shaped by overnight headlines and early positioning. Once ISM hits, it could quickly set the direction for the rest of the session. A reading above 50 signals expansion, and a strong number would suggest consumers and businesses are still spending, which supports the growth story but could cool hopes for Fed easing. A weaker print, especially one that slips toward or below 50, would raise questions about economic momentum and could revive rate-cut bets while also stirring growth worries. Pay close attention to the prices paid and employment components inside the report, since those details often move markets more than the headline figure.
The other factor shaping Wednesday is the fallout from Tuesday's Congressional Elections. With polls closing after the bell, Wednesday will be the first full session where traders can react to the results. That could mean sharp sector rotation as investors reprice areas like energy, healthcare, defense, and financials based on which party gains control and what that means for spending, taxes, and regulation. If results are still being counted in close races, expect lingering hesitation and choppy price action rather than a clean trend. A decisive outcome, on the other hand, often removes uncertainty and can spark a relief move as sidelined money comes back in. Either way, avoid chasing the first big swing at the open, since early election-driven moves can reverse once the ISM data lands. Keep position sizes manageable, use stops, and let both the election reaction and the services data settle before committing fresh capital.
Market Sentiment and Key Levels
Tuesday handed the bulls a win, but it wasn't a clean one. Buyers finally snapped the tech bleed, yet the session's early push stalled out and price drifted off its best levels into the close. That tells you sellers haven't left the building. The rotation story from Monday flipped on its head. The Nasdaq jumped 0.83% and the Russell 2000 added 0.35%, while the Dow slipped 0.38%. Growth is back in favor, with money flowing out of the blue chips and back into the tech-heavy names that got hammered earlier in the week. Mega-cap leadership was mostly green, and that's the main reason the cap-weighted averages could finally catch a bid. Across other assets, Bitcoin gained 1.45% while gold fell 0.95%. When crypto rallies and the safe-haven trade cools off, traders are clearly willing to take on a little more risk again. The VIX dropped 1.99% to 20.73, a modest easing of fear, but it's still sitting above the 20 threshold. That's not the kind of reading that says the coast is clear. The light participation also makes it hard to trust this bounce. Bulls won the day, but bears still hold the bigger short-term structure heading into Wednesday.
SPY finished just shy of first resistance at $755, and that level remains the ceiling bulls need to crack. A push through there opens the door to $758, followed by $760 and $765 if buyers can turn this bounce into a real breakout. On the downside, first support sits at $750, and losing it likely sends SPY toward $745, then $740. If $740 gives way, there is little to keep price from falling toward $735. Zoom out and the bigger picture still looks solid. The long-term bull trend remains intact well above structural support at $640, and this choppy stretch is still playing out inside the broader uptrend. That keeps the backdrop a dip-buying environment as long as key structural levels hold. Wednesday's projected maximum range runs from $745 to $768, with the Put side dominating in an expanding band that points to trending price action mixed with intermittent chop. Another session of Put-side control says the bears haven't given up, even after Tuesday's bounce. SPY has been boxed in between $750 and $755 for several sessions, and the catalyst to break that box is coming. The ISM Services PMI hits at 10:00 AM ET, and it's likely to produce significant volatility, especially in the first hour of trading. A hot reading could revive inflation fears, while a soft one might spark growth worries, so either surprise could send price out of the range in a hurry. Watch whether tech can build on Tuesday's strength or fades right back, since a follow-through rally in mega-caps and crypto would be the clearest sign that bulls are taking back control. Yields and energy prices remain background factors that could pile on if inflation worries flare up. With SPY closing near the top of its range and the Put side still in control, we favor shorting rallies near $755. Let the ISM reaction settle before committing, size positions carefully with the VIX still above 20, and treat a decisive reclaim of $758 as the signal to step aside from the short side.
Expected Price Action
Wednesday's session brings actionable intelligence generated by our AI model, which projects SPY's maximum range at $745 to $768. With the Put side dominating in an expanding band, the model is calling for trending price action with intermittent chop. Wednesday brings the ISM Services PMI at 10:00 AM ET, and that release is likely to produce significant volatility, especially in the first hour of trading. After spending several sessions boxed in, SPY now has a real macro catalyst that could finally break the stalemate. Tuesday's modest gain still left SPY finishing below the middle of Wednesday's projected range and just under the model's first resistance at $755. Combined with the Put-heavy tilt of the band, that gives us a bearish bias heading into Wednesday. The VIX dropped 1.99% to 20.73, a modest easing of fear, but it is still sitting above 20 with a major data release on deck. Calmer nerves help, but sellers have not handed over control yet.
The key battleground for Wednesday remains the $750 to $755 zone that has defined recent trading. $755 is the first resistance and the gate bulls have struggled to clear. A clean push through $755 opens the door toward $758, with $760 and $765 next and $768 marking the top of the model's range. On the downside, losing $750 likely sends price toward $745, the bottom of the projected range and heavy support. Below that sits $740, and if $740 gives way there is little to keep price from falling toward $735. The bigger picture remains healthy, with SPY well above structural support near $640 and the long-term bull trend intact. As long as price holds above key structural levels, this is still a dip-buying market on a broader timeframe.
In the short run, the playbook favors shorting rallies near $755. A pop into $755 or $758 that stalls sets up a short with $750 and $745 as targets. A break below $750 that holds likely turns Wednesday into a trend toward $745, and a move into the $740 area is where dip buyers may start to show up. If $740 cracks, step aside rather than try to catch a falling knife, because $735 can come quickly. If buyers instead reclaim $760 with conviction after the ISM number, the bearish lean fades and a run toward $765 and $768 is on the table. With the services data hitting shortly after the open, the first hour likely decides whether SPY finally escapes its box or breaks down out of it.
Trading Strategy
The VIX dropped 1.99% to 20.73, a modest easing of fear, but it is still sitting above the 20 mark, which tells us traders aren't ready to drop their guard heading into Wednesday. The ISM Services PMI hits at 10:00 AM ET, and that report is the macro catalyst most likely to knock price out of the tight box it has been trading in, so expect a sharp move in the first hour that can blow through levels before settling into a direction. Keep size at roughly half of normal through the open and give stops a bit more breathing room in the 0.75-1% range from entry. The Put side controls an expanding band, and the trending action with intermittent chop the model expects means early pops and drops can reverse hard. Let the data hit and the tape settle before committing real capital.
In a falling market scenario, shorting a failed rally into $755 to $758 is our favored trade and the cleanest bearish setup on the board. A push into that zone that stalls and rolls over is the primary trigger, especially if the VIX climbs back from 20.73 while price struggles to hold gains. The first profit target is $750, with $745 next if sellers keep pressing. That $745 level is the projected low for the day, so treat it as the main stretch target on a heavy trend-down session. Stops on shorts belong above $760, and aggressive traders can tighten to just above $758. If price loses $745 with conviction after the ISM release, don't chase the flush. Short a failed retest of $745 from underneath instead, targeting $740 and then $735. Stops on that breakdown trade belong just above $750. Since a move below $745 would push price outside the projected range, take most profits into $740 and let only a small runner ride toward $735. Scale out in layers into support, because data-driven selloffs can snap back violently once sellers run out of steam.
In a rising market scenario, buying a dip at $750 that holds and firms up is the best long setup, particularly if the VIX keeps sliding further below 20.73 while buyers defend first support. The initial profit target is $755, with $758 next as price works into resistance. Runners can press toward $760, where sellers are likely waiting. Stops on longs belong below $745, just under the projected low of the range. If a strong ISM print lets bulls reclaim $760 and hold it, buy a clean retest of $760 as support, targeting $765 and then $768 at the top of the projected range. Stops on that breakout trade belong below $758. With puts in charge of the band and a market-moving report on deck, any long should start light and add only once the tape confirms direction.
The long-term bull trend remains intact above $640, and this is still a broader dip-buying environment, so the $750 zone is where we want to be a buyer, not a seller. That said, price is pressing the upper edge of its recent box on fading participation, which makes the $755 area a better spot to sell strength than to chase it. For now, the edge favors fading rallies into resistance until bulls prove they can hold above $758.
Model’s Projected Range
SPY's projected maximum range for Wednesday is $745 to $768, with the Put side dominating in an expanding band that suggests trending price action with intermittent chop. Wednesday brings the ISM Services PMI at 10:00 AM ET, which is likely to produce significant volatility particularly in the first hour of trading. SPY closed at $754.44, up 0.31%, after opening at $752.73, dipping to a low of $752.41, and pushing to a high of $757.07 before giving back some of those gains into the close. SPY remains in the $750 to $755 range that has defined recent trading, and Wednesday's ISM Services report is the key macro catalyst that could finally knock price out of that box. If SPY breaks above $755 resistance, the next target is $758, while a break below $750 support opens the door to $745, and if $740 gives way there is little to keep price from falling toward $735. 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 $755, $758, $760, $765, while support rests at $750, $745, $740. With SPY closing near the top of its range, we favor shorting rallies near $755. Bitcoin gained 1.45% but closed below $77,792, and the MAG stocks put up a mostly green day led by Microsoft up 2.74%, with Apple the lone laggard down 1.90%, so strength across both leadership groups supports the broader rally. The VIX closed at 20.73, down 1.99%, suggesting a modest easing of fear, though it is still sitting above 20 heading into Wednesday's data. SPY continues to trade within its prevailing channel with structural support near $640.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended Tuesday in a Ranging Market State with SPY closing at $754.44. No extended targets were printing at the close, which tells us neither side had real control heading into Wednesday. The MSI rescaled lower overnight into a Bearish Trending state. In the premarket it rescaled higher into a Ranging state, and no extended targets were visible in premarket. The MSI held that Ranging state through the open. Then during the AM session the MSI began rapid rescaling higher and flipped into a Bullish Trending state. Extended targets printed above during the AM session and again in the PM session, but they came and went instead of building into a steady stream.
That on-and-off behavior was the MSI's way of telling us the rally lacked real conviction. The range of the MSI stayed fairly contained, and extended targets were missing for most of the day, so this was never a strong trend. Sure enough, once SPY reached $757 major resistance it stalled and rolled over, and the MSI rescaled back into a Ranging state into the close. The MSI finished in a moderate $2.39 Ranging state. That isn't the tight squeeze of a narrow range, but it isn't the wide-open room of a strong trend either.
For Wednesday the MSI forecast is sideways to slightly higher as a continuation of today's action. Without extended targets at the close the move may be modest and is likely to find resistance at key levels above. The MSI is also pointing to choppy conditions, most likely because the election could take days to resolve and keep headlines swirling. SPY closed inside the range, so both levels keep their roles. MSI support is $753.21 with resistance at $755.6.
Key Levels and Market Movements:
Monday we stated, "Bulls want to see overnight price hold $752.01 and stabilize after Monday's reversal," and added, "Bears want to see $752.01 fail, with the MSI rescaling lower and extended targets printing below again," while also noting, "Any rally into $756.7 is a shorting opportunity targeting $752.01."
The bulls got the first part of their script, and the bears got their level. Overnight the MSI rescaled lower and briefly put the bears in position. However, $752.01 never broke. SPY opened at $752.73 and put in its low at $752.41, holding just above $752.01 exactly the way the bulls wanted. Premarket had already flipped the MSI back into a Ranging state, and the bears' push for extended targets below never showed up.
From there the AM session belonged to the buyers. The MSI began rapid rescaling higher, flipped into a Bullish Trending state, and extended targets printed above as SPY climbed through the morning and into the early afternoon. The climb was choppy, though. Extended targets came and went, and the MSI range never really opened up. SPY ran into $757 major resistance, topped out at $757.07, and turned lower. Monday we said $756.7 was likely to hold, and it did so virtually to the penny. Sellers took over from that point, SPY slid back through $755.6, and the MSI rescaled into a Ranging state as SPY closed at $754.44.
Four trades followed. The first came early in the Ranging state at the open. With SPY holding above $752.01, buying the test of MSI support and targeting MSI resistance lined up perfectly with the bull case. The second came when the MSI first flipped to Bullish Trending during the AM session. That setup was buying the test of the new MSI support and riding it to the new MSI resistance as extended targets printed above. The third came during the rapid rescaling higher. Each new MSI support that got tested was a long, targeting the upper line as SPY worked its way toward $756.7 and $757. The fourth was the failure at $757 major resistance. Monday's plan called for selling rallies into $756.7, and once SPY stalled at $757.07 and rolled over, selling the rejection and targeting $755.6 paid off as price slipped back toward the close. At minimum it was a 4-for-4 session for traders following the framework.
SPY gained 0.31% on volume of 28.96 million shares, below average, which matches the lack of conviction the MSI was flagging all day. The VIX dropped 1.99% to 20.73. Fear eased a bit but is still sitting above 20, so traders aren't fully relaxed yet. It was an easy day to read albeit not an easy day to trade given the tight choppy range. But substantial setups were present, 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:
Wednesday has heavy economic data with ISM Services PMI at 10:00 AM ET which can introduce significant volatility, so traders should be ready to trade what they see rather than predict. On top of that, election results could take days to resolve, and headlines can create sharp swings. The MSI closed in a moderate $2.39 Ranging state with $755.6 as resistance and $753.21 as support. SPY closed inside that range, so both levels hold their roles for Wednesday. The MSI forecast is sideways to slightly higher as a continuation of today's action. Without extended targets at the close, though, any move up may be modest and is likely to find resistance at key levels above.
Bulls want to see overnight price hold $753.21 and build on Tuesday's gains. From there they need to reclaim $755.6 and push back toward $757 major resistance with the MSI rescaling higher and extended targets printing above. A clean break of $757 would open the door to $760. Bears want to see $753.21 fail, with the MSI rescaling lower. That would press SPY back toward Tuesday's $752.41 low and $752.01, with $750 major support below that.
SPY finished higher on Tuesday and the MSI closed Ranging, so a modest continuation higher is the most likely path. Any dip to $753.21 is a buying opportunity targeting $755.6. If SPY pushes above $755.6, expect sellers to show up again near $757 major resistance, where a failed breakout could offer a short back toward $755.6. A failed breakdown below $753.21 that quickly reclaims the level would be a strong long back toward $755.6. If bears can break and hold below $753.21 with conviction, that would signal a shift and put $752.01 in play. Failed breakouts and breakdowns within the range are the highest probability setups. If ISM Services PMI or election headlines provide a catalyst, watch for the MSI to rescale and move into a trending state. Until then, expect chop and let the levels do the work.
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 $757 to $790 and higher strike Calls while buying $755 to $756 and $767 Calls, indicating the Dealers' desire to participate in any rally on Wednesday. SPY held above $750 on Tuesday, which was our Call wall from the prior day, and Dealers have not adjusted their hedges. That suggests a relatively balanced market at these levels. The ceiling for Wednesday appears to be $765. To the downside, Dealers are buying $754 to $690 and lower strike Puts in a 4:1 ratio to the Calls they're buying, displaying continued concern that prices could move lower. There is a Call wall at $765 which will act as resistance, and a Put wall at $740 which will act as temporary support. Gamma is strongly negative around these levels, so that support is unlikely to hold for long. The Call wall at $765, however, sits in positive gamma territory, so Dealers will likely defend it if price approaches, which effectively caps the market for Wednesday. Above $754 is bullish and below $750 is bearish, with chop and traps in between. Dealer positioning is unchanged at neutral/slightly bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $765 to $805 and higher strike Calls while buying $755 to $764 Calls in large quantities, indicating the Dealers' desire to participate in any rally into the end of the week. The size of those Call purchases shows some real belief that the market can move higher by Friday. As we noted yesterday, 19 of the last midterms saw the market rally, so Dealers want a seat at the table if prices push higher. The ceiling for the week appears to be $766/770. To the downside, Dealers are buying $754 to $695 and lower strike Puts in a 4:1 ratio to the Calls they're buying, showing they remain heavily hedged against further downside. There is a Call wall at $770 which will provide resistance, with a Put wall at $740 which will provide temporary support. Because Gamma is negative, a move lower is likely to fail. A move higher flips Gamma positive at $762.65, which makes the Call wall at $770 the likely ceiling for this week. Below $750 is bearish and above $760 is bullish, with chop and traps in between. 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 $755, targeting $750 and $745, with stops above $758.
With ISM Services hitting at 10:00 AM ET, 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!
