Market Insights: Monday, December 1st, 2025

Market Overview
Stocks stumbled out of the gate to start December, with all major indices closing lower following last week’s holiday-shortened optimism. The Dow dropped 0.89%, its worst daily performance in nearly a month, while the S&P 500 fell 0.45% and the Nasdaq declined 0.38%. After finishing November with strong gains, Monday’s session reflected a broader risk-off tone as traders returned from the break facing renewed questions about Fed policy, inflation trajectory, and sector leadership. Bitcoin plunged over 6%, dragging down sentiment further, while weakness in small caps and a rise in Treasury yields weighed on broader risk appetite. Alphabet and Apple managed to hold up well, with the latter posting another all-time high, but most tech names lagged, and market breadth deteriorated. With the Fed entering blackout and Friday’s PCE inflation report delayed, traders are operating without a strong narrative anchor, making the market vulnerable to headline volatility and short-term reversals.

SPY Performance
SPY opened at $678.80, quickly tested $682.99, but faded steadily through the session to close down 0.45% at $680.30. Volume surged to 55.83 million shares, confirming significant participation in the post-holiday reversal. Although the close was lower, SPY remained above critical short-term support at $678 and preserved most of last Tuesday’s breakout structure. The key now is whether bulls can hold $678 and reclaim $683.60 to reestablish momentum. A failure to defend $678 could quickly expose $675 and $672. Monday’s action marks a cooling off after November’s strength, but doesn’t yet break the bullish structure. However, bulls must be vigilant, as cracks in leadership or another crypto-led sell-off could tilt momentum back toward the bears.

Major Indices Performance
The Dow led losses with a 0.89% decline, dragged down by weakness in financials and industrials. The S&P 500 dropped 0.45%, and the Nasdaq shed 0.38% despite strength from Apple and Nvidia. The Russell 2000 slumped 1.26%, undercutting last week’s gains and renewing concerns about the sustainability of the small-cap rally. Breadth turned decisively negative, and while most declines were orderly, the tone was clearly cautious. The rally that powered markets through November may need to digest before resuming, and upcoming economic data will determine whether this was simply a pause or the start of something more significant.

Notable Stock Movements
Apple defied the broad-market weakness with a 1.57% gain to close at a fresh record high. Nvidia recovered from early weakness and closed up 1.21%, continuing to stabilize after recent volatility. Meta, Microsoft, Alphabet, and Tesla all closed lower, weighing on the Nasdaq and reflecting a rotation out of mega caps following November’s surge. Bitcoin’s 6.03% drop below $86,000 reignited fears of a broader risk-off move, though its decoupling from tech stocks limited the damage. Crude oil climbed 1.57% to $59.47, while gold rose 0.35% to $4,269. While select leadership names remain firm, the mixed action beneath the surface reflects growing investor indecision heading into the final month of the year.

Treasury Yield Information
The 10-year Treasury yield rose 1.34% to 4.093%, snapping its recent downtrend and putting mild pressure on growth stocks. While still below key technical resistance levels, the uptick in yields caught traders’ attention and served as a reminder that any renewed inflation fears or hawkish repricing could reignite volatility. If yields climb back toward 4.5% or higher, equities may struggle to maintain their footing. For now, the move remains in check, but bond market dynamics remain a key variable for equity direction.

Looking Ahead
Markets now turn to a dense calendar of economic data beginning Tuesday with ISM Manufacturing and JOLTS, followed by ADP and Jobless Claims midweek, and concluding with Friday’s delayed PCE inflation report and the University of Michigan sentiment survey. SPY must hold $678 and reclaim $683.60 to continue its bullish trend. A break below $675 opens the door to $670 or lower. With the Fed in blackout mode, economic data becomes the primary market driver. Bulls still control the longer-term trend, but the near-term tone is vulnerable unless buyers step in decisively.

Market Sentiment and Key Levels
SPY closed at $680.30, down 0.45%, but held above key support. Resistance lies at $681.60, $683.60, and $686.10, while support is found at $677, $675, and $672. SPY’s projected range for Tuesday is $668.75 to $681.25, with compressed positioning suggesting choppy intraday action interrupted by sharp directional moves. Call dominance has narrowed, hinting at reduced dealer exposure. The VIX remains subdued at 18.56, but could quickly spike on data surprises or a fresh drop in crypto. As long as SPY remains above $670, the broader bull structure remains intact, though momentum is starting to fade.

Expected Price Action
SPY’s price action was largely technical, with early strength reversing after rejecting near $683. The session closed near the midpoint of the day’s range, signaling indecision. Price is likely to remain range-bound between $678 and $683 unless Wednesday’s data provides a catalyst. A clean break above $683.60 could target $686.10 and then $690, while a breakdown below $675 would invalidate the short-term bullish thesis and suggest a deeper pullback toward $670 or lower.

Trading Strategy
We favor long setups above $677, targeting $681.60 and $683.60. Failed breakdowns near $675 or $672 may offer additional entries, but stops must be tight. Short entries become viable only on a break and close below $675, with targets near $672 and $670. Avoid chasing strength into $683 unless volume confirms. This is a market still favoring dips, but traders must remain nimble and avoid aggressive exposure ahead of multiple data catalysts this week.

Model’s Projected Range

SPY’s projected maximum range for Tuesday sits between $675.75 and $687.75, with the Call side dominating in a narrow band that signals choppy price action with brief trending periods. Today the market started December on a down note, with SPY falling 0.46% to close at $680.27, below the $685 level where the bulls regain full control but above the $670 level where the bears hold more influence. Overnight SPY moved sharply lower after last week’s holiday rally, pulling back to retest major support at $675 before stabilizing and ending the day only slightly red. Manufacturing PMI contracted for the ninth straight month as factories faced higher input costs due to tariffs. By the close, SPY finished near its opening level, setting up Tuesday to mirror today with likely rangebound action between $675 and $685. Overnight the bulls will aim to hold $677 to frame today as a simple pause after five straight green days, attempting to push SPY back above $685. A failure of $677 increases the odds of retracing last week’s rally, opening the door to $672 and possibly $667. Volume was average, which supports the broader market structure. Absent an external catalyst, resistance sits at $681, $685, and $689, with support at $677, $675, and $672. Above $685 gains should be muted due to heavy resistance, while a break below $677 could send price toward $667. The broader trend remains bullish above $640 and the near term still favors the bulls, so for Tuesday we defer to the prevailing trend and prefer longs from support near $677 while watching for short setups as price approaches $685. Crypto fell sharply today while Mag stocks were mixed. As we have noted for weeks, until meaningful weakness returns in these leadership groups the market is likely to continue higher. VIX rose 5.44% to 17.24 and remains in neutral territory awaiting a catalyst. December is historically strong, but with Crypto weakness and a soft start to the month that outcome is not guaranteed. Traders should stay flexible and trade what they see, with a slight edge to the bulls for some continuation of the recent five day rally. SPY closed mid-channel within a redrawn bull trend that continues to weaken. The bear channel lasted only three days and the model has now reversed and is projecting higher prices.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in a Bearish Trending Market State, with SPY closing at MSI resistance. There were no extended targets at the close, however there were periods of extended targets in the premarket into the open which foretold of market weakness for the day. Overnight the MSI rescaled to a narrow bearish state and continued to rescale lower but remained quite narrow and contained. By the open the MSI has rescaled to a ranging state which forecast the day’s choppy, mostly sideways price action. By the close, the MSI was back to its opening bearish state which implies more of the same on Tuesday. MSI support is $679.08 with resistance at $680.27.
Key Levels and Market Movements:
We did not publish a newsletter on Friday given the half day, and we expected last week’s information to be stale by today, especially after a five day rally that gave us little reason to believe the market would fall, but it did, which is why we publish the premarket report daily to give the most current information possible. At the open we traded the plan from the premarket, which noted that the market would likely struggle to regain its footing but would probably bottom first before failing at major resistance at $682.10. With that context we looked for longs off MSI support at $679.08 right at the open once extended targets stopped printing, and we set T1 at $680.27 and T2 at the premarket level of $681.60. A quick pop filled T1 and price immediately pulled back to our entry, and while we expected to be stopped out on our remaining 30%, price resumed its bounce and hit T2 before 10 am, allowing us to move our stop to breakeven and trail. Price came back to our entry and stopped out the runner at breakeven, and though we considered re-entering long, we waited instead for the short setup outlined in the premarket since it carried better odds. Price reached MSI resistance at $682.67, and with no extended targets above and a very narrow MSI, we shorted MSI resistance and set T1 at the premarket level of $681.60 with T2 at MSI support at $680.27. A quick drop hit both targets, leaving us to trail the final 10%, and while the MSI rescaled lower, the lack of extended targets led us to close the runner a few minutes before the close for two solid trades on an otherwise narrow and choppy day. Two for two thanks to having a clear plan, maintaining patience and discipline, and staying aligned with MSI signals, market structure, and our broader trading framework. The MSI continues to prove its reliability as the cornerstone of our trading process.
Trading Strategy Based on MSI:
Today’s one day pullback was relatively muted given last week’s strength, and while SPY is below $685, $675 held and the battle continues to favor the bulls, though Crypto’s collapse is creating risk-off sentiment that warrants caution on aggressive longs until SPY reclaims $685 and Crypto stabilizes. For Tuesday we will look for bounces toward $675 and also seek shorts up to $685 for two day, rangebound trading, as the MSI is forecasting slightly lower prices. If the bulls hold $677 overnight, they are likely to make a run at $685 to take full control, but if $677 fails, the market is likely to test lower levels and possibly reach $662. Macro risks remain, so traders should stay alert for news about Venezuela or other developments that could move markets, but absent those risks, look to buy dips more cautiously, fade rallies below $685 on failed breakouts, and sell below $670 if price dips that far. The long-term bull trend remains intact above $640, so favor the bulls and the larger trend as long as price holds above $677. 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 $700 and higher strike Calls while also buying $681 to $683 Calls indicating the Dealers’ desire to participate in any relief rally on Tuesday. The ceiling for tomorrow appears to be $685. To the downside, Dealers are buying $680 to $565 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 Friday:
Dealers are selling SPY $684 to $700 and higher strike Calls while also buying $681 to $683 Calls implying Dealers’ desire to participate in any rally this week. The ceiling for the week appears to be $690. To the downside, Dealers are buying $680 to $565 and lower strike Puts in a 6:1 ratio to the Calls they’re selling/buying, reflecting a market that continues to be concerned about lower prices. 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
Trim longs near $683 and wait for confirmation before adding new exposure. Buy dips into $677–$678 with clear stops below $675. Watch for failed breakouts above $683.60 for potential fades. Stay aligned with MSI and dealer levels. With macro data and year-end flows in play, this week demands patience and strict risk management. Maintain a slight bullish lean above $670, but respect price action and trade level-to-level.

Good luck and good trading!