Market Insights: Tuesday, November 4th, 2025

Market Overview

Stocks fell sharply Tuesday as rising concerns over stretched AI valuations and deteriorating leadership from mega-cap tech names triggered a broad risk-off move. The Nasdaq plunged 2.04%, the S&P 500 dropped 1.17%, and the Dow declined 0.53% in a session marked by heavier volume, fading conviction, and growing worries around a deeper correction. The sell-off came amid a string of mixed earnings results and a sharp drop in Bitcoin, which fell below $100,000 for the first time since June. Investors grew cautious after CEOs from several major firms warned that current valuations may not be sustainable, even as earnings continue to meet or exceed expectations.

Palantir dropped nearly 9% despite reporting solid quarterly results, as analysts questioned its lofty valuation. Nvidia tumbled almost 4% as AI-related enthusiasm cooled, while Tesla fell more than 5% ahead of Thursday’s critical shareholder vote on Elon Musk’s $1 trillion pay package. Amazon and Microsoft also ended lower, contributing to weakness across the Magnificent Seven. Meanwhile, Uber slid despite strong earnings, highlighting how high expectations have become and how little room there is for disappointment. Adding to the pressure, Norway’s sovereign wealth fund announced it would vote against Musk’s compensation deal, a significant move from one of Tesla’s largest investors.

The risk-off tone extended beyond equities. Bitcoin dropped 5.92% to close just above $100,400, pressured by a rising U.S. dollar and fading liquidity amid the ongoing government shutdown. The delay in key economic reports including Friday’s jobs data is increasing uncertainty, as traders are left without the macro visibility typically used to anchor positioning. The ADP Employment Change and Services PMI reports due Wednesday are now front and center as market-moving events. For now, downside momentum is building, and while bulls retain long-term control above $640 on SPY, bears have begun to chip away at short-term support zones, raising the risk of a deeper retracement.

SPY Performance

SPY opened at $675.84 and traded in a wide intraday range, hitting a high of $679.95 and a low of $674.58 before closing at $675.37, down 1.17%. Volume came in at 72.14 million shares, slightly above average, suggesting increased conviction behind Tuesday’s decline. SPY filled Friday’s gap and nearly filled Thursday’s, closing directly on the $675 support level flagged in Monday’s outlook. The move confirmed mounting short-term pressure and left bulls on the defensive heading into Wednesday.

Major Indices Performance

The Nasdaq led the decline with a 2.04% drop, followed by the Russell 2000’s 1.76% slide as small caps continued to underperform. The S&P 500 lost 1.17%, while the Dow held up better but still declined 0.53%. The Magnificent Seven were broadly red, with the sole exception of Apple, which rose 0.37%. The day’s action marked one of the sharpest reversals in recent weeks and suggests further downside risk should support levels fail.

Notable Stock Movements

Palantir fell 8.78% after earnings, as valuation concerns outweighed solid fundamentals. Nvidia dropped 3.88%, adding to recent weakness in AI leaders. Tesla sank 5.29% ahead of Thursday’s shareholder meeting, where Musk’s pay package will be voted on. Uber lost 3.4% despite beating on both earnings and revenue. Amazon, Alphabet, Meta, and Microsoft all posted losses, while Apple stood out as the only gainer among the mega caps. Spotify and Super Micro are set to report later this week, with AMD also on deck and likely to be closely watched for AI-related commentary.

Commodity and Cryptocurrency Updates

Crude oil fell 1.06% to $60.40, still hovering around our long-standing $60 target. While oil remains range-bound, the $56 level continues to serve as the critical support zone, and a hold above could spark another rally attempt toward $70. Gold dropped 1.74% to $3,944, giving up recent gains amid broader risk aversion. Bitcoin plunged 5.92% to close at $100,400, pressured by a rising dollar, declining liquidity, and a sharp drop in sentiment across crypto assets.

Treasury Yield Information

The 10-year Treasury yield declined slightly by 0.51% to close at 4.086%. While still near the 4% psychological level, yields remain well below the 4.5% threshold that typically pressures equities. However, with volatility climbing and equities weakening, bonds are once again catching safe-haven bids. As a reminder, yields above 4.8% can trigger selling, and anything above 5% heightens the probability of a full correction. At 5.2%, equities risk a drawdown exceeding 20%.

Previous Day’s Forecast Analysis

Monday’s outlook projected a possible move lower before a bounce attempt, with $675 as a key support level and $683.35 as the upside target. SPY opened weak, rallied to $679.95, and reversed sharply to hit $674.58 before closing at $675.37 — nearly dead-on with our $675 support call. While the rally attempt materialized early, it failed to hold, and the rejection confirmed growing pressure. The roadmap once again provided traders with actionable levels and a clear framework for intraday execution.

Market Performance vs. Forecast

Price rejected below the $677.85 bias level early in the session and headed toward our downside targets at $675 and $672. Though $675 held, the breakdown tested Monday’s thesis of bullish control. Traders following the roadmap had clean opportunities to fade early strength and catch the rollover into support. With volume picking up and macro catalysts looming, the forecast accurately identified the downside risk and actionable levels.

Premarket Analysis Summary

Tuesday’s premarket analysis flagged $677.85 as the bias level, with downside targets at $675 and $672, and upside levels at $681.35 and $683.35. The overnight drop carried into the session, and SPY failed to reclaim bias, signaling bearish control. The market briefly rallied to $680 before selling off into our lower targets. Once again, patience around bias and alignment with price action paid off, validating the model’s reliability.

Validation of the Analysis

SPY behaved exactly as expected: early rejection at bias, a brief bounce attempt, and a breakdown toward key support. The $675 level served as a clear pivot and closed as the day’s anchor. The session validated both directional bias and specific level targets from our premarket plan. Traders had multiple clean setups to work both the short and long side depending on timing.

Looking Ahead

SPY’s projected range for Wednesday sits between $670 and $680. Resistance is now at $678, $680, $684, and $690, while support rests at $673, $670, and $665. With ADP Employment Change and Services PMI due premarket, volatility is expected early. Traders should prepare for a reactive session, with price likely moving swiftly in response to the data.

Market Sentiment and Key Levels

SPY closed at $675.37, still well above the critical bull/bear line at $640, but now threatening the lower boundary of the April bull channel. The VIX jumped 10.83% to 19.03, nearing the 23 stress threshold. This move suggests risk appetite is fading, and another day of weakness could send volatility into more destabilizing territory. For bulls to reassert control, SPY must reclaim $680 and hold above it. A loss of $670 would open the door to $665 and possibly deeper downside.

Expected Price Action

Expect volatility to rise as traders digest fresh economic data. A push above $680 could spark a short-covering rally toward $684. Conversely, a loss of $673 may send SPY toward $670 or $665. Traders should stay nimble and reactive, avoiding chasing moves unless confirmed by volume and structure. Range expansion and headline sensitivity are likely to define Wednesday’s tape.

Trading Strategy

Go long above $675 with upside targets at $678 and $680. Consider short entries on failed rallies near $680 or a breakdown below $673, with $670 and $665 as targets. Use the MSI to avoid trades during ranging states and wait for directional alignment. Momentum is weakening, but the broader uptrend still holds unless $670 decisively breaks.

Model’s Projected Range

SPY’s projected maximum range for Wednesday sits between $669 and $683, with the Put side dominating in an expanding band that suggests trending price action interlaced with periods of chop. ADP Employment Change and Services PMI are both due in the premarket, and given the market’s current sensitivity to limited data and headlines, either could dictate direction early in the session. With the ongoing government shutdown and another busy earnings week, traders should expect price action to be headline-driven and volatile. Today, SPY fell 1.19%, filling Friday’s gap and nearly completing Thursday’s, as it closed at $675.24, right on a major support level identified in yesterday’s report. While the bulls technically remain in control above $640, the bears regained some ground with this decisive close at $675, signaling short-term pressure within the broader uptrend. To reassert control, the bulls must reclaim $680 quickly; failure to do so invites further downside testing. Our model suggests a likely overnight or early-session dip below today’s lows to trap bears, followed by a potential reversal toward $680. However, if $673 fails to hold, SPY could easily extend to $670 or even $665, marking the start of a deeper pullback. Volume came in above average, confirming conviction behind today’s decline. Bulls need a firm close above $680 to resume the uptrend, while a rejection at that level could present a solid short setup, inviting bears to retest $675 and below. Absent a major catalyst, resistance for Wednesday sits at $678, $680, $684, and $690, with support at $673, $670, and $665. A sustained move above $680 would likely accelerate momentum higher, while a drop below $670 would increase the odds of a larger correction. Crypto fell sharply again today, and all major Mag stocks except Apple declined, underscoring ongoing weakness in leadership names, a key risk we’ve been flagging for weeks. Persistent softness across these sectors and in crypto could still trigger the 10–15% correction we’ve been projecting. For now, bulls and bears are locked in a tactical battle for short-term control, with the broader trend still technically favoring higher prices, though conviction is fading. The VIX jumped 10.83% to 19.03, inching closer to the 23 stress threshold. Another day of heavy selling could quickly push volatility into a more unstable zone. SPY closed near the lower boundary of its bull channel from the April lows, with key structural support at $670. A confirmed break below that level could mark the beginning of a meaningful unwind of 2025’s gains, but until that occurs, the long-term bull trend remains technically intact.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in a Bearish Trending Market State, with SPY closing well below MSI support turned resistance. There were no extended targets for much of the day and into the close signifying the herd participating in today’s decline. With a gap down overnight, the MSI rescaled to its current bearish state and remained there for most of the day with only a brief time in a ranging state mid-morning. For Wednesday the MSI is forecasting lower prices with the likelihood of price once again testing both sides of today’s range. MSI resistance is $676.52 and higher at $678.57.
Key Levels and Market Movements:
On Monday we wrote, “Tuesday could once again see SPY test both the day’s lows and highs, with direction hinging largely on headlines from the White House or any major earnings misses,” and noted, “The $679 level remains the key line in the sand, and if it holds, the broader bull trend stays intact; if it fails, a deeper pullback and potential gap fill become increasingly likely,” while also adding, “Dip buyers continue to defend $679, but repeated tests at that level suggest weakening liquidity and a growing risk of acceleration toward $677 or even $675 if it gives way.” With this context, and with the MSI opening in a wide bearish state accompanied by extended targets below, the plan was simple; find a short setup to align with the prevailing trend. Out of the gate, SPY rallied sharply, pushing above MSI resistance and triggering a rescale to a ranging state. While this looked like a potential shift higher, extended targets below stopped printing, signaling a likely “dead cat bounce.” Once SPY moved back to MSI resistance at $678.57, we entered short with T1 set at MSI support at $676.52. That target hit before 1 p.m., and we quickly set T2 at the premarket level of $675, believing that might mark the day’s low. With T2 reached, we moved our stop to breakeven and waited to see if $675 would break. A bounce back to MSI support-turned-resistance suggested a potential re-entry, but with solid profits already secured, we opted to stay in profit protection mode and simply trail the remainder. A second test of $675 came late in the session, and we decided to close the position there and call it a day. Another clean, one-and-done trade driven by a clear plan, disciplined execution, and perfect alignment between MSI signals, the 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:
Wednesday could once again see SPY test both the day’s lows and highs, with direction hinging largely on headlines from the White House or key earnings results. The $675 level remains the critical line in the sand. If it holds, the broader bull trend stays intact, but if it fails and does not recover quickly, a deeper pullback and potential gap fill become increasingly likely. Should SPY reclaim $680, the bulls will aim to clear $685 and then $690. With markets driven mostly by external catalysts and limited economic data on deck, it’s essential to trade what you see and stay nimble. On the downside, while dip buyers repeatedly defended $675 today, multiple retests suggest weakening liquidity at this level; a clean break without an immediate recovery could open the door to $670 and potentially lower. While our bias remains to trade with the prevailing bullish trend, the bears now have a foothold and are unlikely to surrender it easily. Even a rally to $680 could prove to be a dead cat bounce and a shorting opportunity. We’ll be watching closely for failed breakouts between $679 and $681, guided by MSI confirmation and also for a break of $675 to go short. A break above $681 on volume will get us long. With the VIX hovering near 20, the market is flashing early risk-off signals, but unless it breaks above 23, this weakness may prove short-lived. The key threshold for the broader bull market remains $640. A decisive break below that level would shift full control to the bears. For now, failed breakouts and failed breakdowns continue to offer the highest-probability setups, so remain flexible, avoid trading during Ranging Market States, 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

Summary of Current Dealer Positioning:
Dealers are selling SPY $684 to $705 and higher strike Calls while also buying $676 to $683 Calls reflecting the Dealers’ desire to participate in any relief rally on Wednesday. The ceiling for tomorrow appears to be $684. To the downside, Dealers are buying $675 to $600 and lower strike Puts in a 4:1 ratio to the Calls they’re selling displaying concern that prices could move lower. Dealer positioning is unchanged from bearish to bearish.
Looking Ahead to Friday:
Dealers are selling SPY $684 to $705 and higher strike Calls while also buying $676 to $683 Calls reflecting the Dealers’ desire to participate in any recovery rally this week. The ceiling for the week appears to be $690. To the downside, Dealers are buying $675 to $600 and lower strike Puts in a 6:1 ratio to the Calls they’re selling, reflecting a market that is hedged heavily given its’ lofty levels. Dealers are fully hedged for what may come and added more protection today. For the week Dealer positioning is unchanged from bearish to bearish but again Dealers have added additional protection. 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. Longs above $675 with targets at $678 and $680. Shorts favored on failed moves near $680 or clean breakdowns below $673. Use MSI confirmation and avoid trades during Ranging Market States. With volatility rising and headline risk climbing, execution discipline is paramount. Bulls still have the long-term edge, but short-term control is now contested.

Good luck and good trading!