Market Insights: Wednesday, December 3rd, 2025
Market Overview
Stocks drifted modestly higher on Wednesday, supported by steady economic data and a rebound in crypto markets. The Dow rose 0.39%, the S&P 500 added 0.30%, and the Nasdaq gained 0.59%, marking the first day of broad stabilization after a weak start to the month. Sentiment improved after ADP private payrolls fell by 32,000 jobs — a surprise miss that reinforced expectations for a rate cut at the Fed’s December meeting. ISM Services printed at 52.6, indicating steady expansion, while a notable drop in prices paid further cooled inflation concerns. The combination of softer labor data and easing price pressure boosted hopes for a policy shift and added fuel to a growing Santa Rally narrative. Crypto roared back with Bitcoin surging more than 5% above $91,000, supporting speculative appetite. However, participation remained somewhat uneven, and despite the bounce, markets remain vulnerable to headline risk until Friday’s delayed PCE inflation data.
SPY Performance
SPY opened at $681.84 and closed up 0.17% at $681.43 after trading in a relatively tight range. Intraday, SPY rose as high as $683.82 before pulling back to $679.33. The session marked a healthy consolidation day with bulls maintaining control above $678 and fending off early weakness. Volume totaled 56.35 million shares, slightly above average and signaling renewed interest after a sluggish start to the week. While SPY failed to reclaim the $685 breakout level, its ability to hold key short-term support leaves the door open for a fresh move higher, particularly if economic data continues to trend dovishly.
Major Indices Performance
The S&P 500 rose 0.30%, the Dow added 0.39%, and the Nasdaq climbed 0.59%, powered by gains in Apple and a bounce in crypto-related equities. The Russell 2000 struggled again, closing down 0.12% and continuing to lag broader benchmarks. Performance across sectors was mixed but tilted slightly positive, with semiconductors, software, and crypto-related stocks outperforming. Despite modest overall gains, the tone of the market shifted back toward cautious optimism as traders positioned for the remainder of the week’s macro data releases.
Notable Stock Movements
Apple hit another record high with a 0.81% gain, while Intel surged 7.06% on rumors it could become a supplier to Apple within two years. Nvidia climbed 1.19%, bouncing back from recent weakness, and Microsoft, Alphabet, and Meta all closed modestly higher. Tesla was the lone underperformer among the Mag7, dipping 0.21%. Bitcoin jumped 5.49% to finish above $91,000, fueling gains in Coinbase and other crypto-linked names. Crude oil dipped 1.16% to $58.63, while gold lost 0.82% to close at $4,239. Wednesday’s price action was led by large-cap tech, chips, and crypto, but broader participation remains limited, suggesting the rally still lacks conviction.
Treasury Yield Information
The 10-year yield dipped slightly by 0.27% to 4.086%, continuing its retreat from last month’s highs. Lower yields are helping to support valuations in tech and high-growth names, and the steady drift lower reflects increased confidence that inflation has peaked. A strong PCE report Friday could challenge this view, but for now, bond markets appear aligned with the Fed pivot narrative.
Looking Ahead
Thursday brings Unemployment Claims, followed by Friday’s delayed PCE and University of Michigan sentiment reports — the last major data points before the Fed’s December policy meeting. SPY remains trapped just below resistance at $685, but bulls have a clear path to higher levels if data remains soft. Conversely, hotter-than-expected inflation could shift positioning quickly. Heading into Thursday, the market remains in a coiled state, with volatility likely to return around key releases.
Market Sentiment and Key Levels
SPY closed at $681.43, up 0.17%, and held above key support. Immediate resistance lies at $683.60, $685, and $688, with support at $679, $675, and $670. The projected range for Thursday sits between $676 and $688, with dealer positioning suggesting a narrow band of chop unless catalysts emerge. Price continues to coil near the upper half of the recent range. Bulls remain in control above $670, but failure to clear $685 keeps the broader market in consolidation mode.
Expected Price Action
Wednesday’s intraday action reflected indecision, with SPY fading from early strength but recovering off lows. This pattern suggests ongoing consolidation with potential breakout setups if $683.60 or $685 are taken out with volume. Failure to hold $679 would shift focus back to $675 and $672. Traders should expect more two-way movement ahead of Friday’s key reports and remain nimble with entries near well-defined levels.
Trading Strategy
Buy dips near $679 with tight stops below $675. Longs become more attractive above $683.60, with a breakout through $685 targeting $688 and $690. Shorts remain valid near $685 on failed breakouts. The ideal setups remain near range edges, avoiding mid-range chop unless backed by strong momentum or news. Stay flexible and reduce size ahead of Friday’s macro catalysts.
Model’s Projected Range
SPY’s projected maximum range for Thursday sits between $679 and $690, with the Call side dominating in a narrowing band that signals choppy price action with brief trending periods. Today the market continued its recovery with SPY rising 0.35% to close at $683.89, sitting just below $685 where the bulls regain full control. Overnight SPY moved slightly higher and looked ready to push toward $685, but negative news from Microsoft sent the market lower just before the open. Once again the bulls stepped in at $679.50 and bought the dip, pushing SPY to a new weekly high. SPY has been rangebound between $675 and $685, and with today’s rally that range is likely to break on Thursday or Friday. Unemployment claims hit tomorrow and PCE arrives Friday, and either event could provide the catalyst to push SPY toward new all-time highs or derail the bull trend and give the bears another chance. Overnight the bulls will aim to hold $680 to continue building on the current rally. If $680 fails, SPY will test $678 and a break there gives the bears an opportunity to drive price lower. Volume was below average today which does not help the broader market. Absent a catalyst, resistance sits at $685, $688, and $690 with support at $680, $677, and $674. Above $685 gains will likely be muted due to heavy resistance, while a break below $674 could send price toward $670 with ease. The broader trend remains bullish above $640 and the near term still favors the bulls, so for Thursday we defer to the prevailing trend and prefer longs from support above $680 while watching for short setups as price approaches $685. Crypto rose sharply again today which continues to signal risk on, while Mag stocks were mostly lower except Alphabet and Tesla. As we have noted for weeks, the market is likely to continue higher until meaningful weakness returns in these two leadership groups. VIX fell 3.07% to 16.08 and remains in neutral territory waiting for a catalyst. December is historically strong but the month’s mixed start leaves that outcome uncertain, so traders should stay flexible and trade what they see with an edge to the bulls for continuation of the recent rally. SPY closed mid-channel within a redrawn bull trend that continues to weaken, yet the brief bear channel has disappeared, suggesting higher prices remain likely.
Market State Indicator (MSI) Forecast
Current Market State Overview:
The MSI ended the session in a Bullish Trending Market State, with SPY closing well above MSI resistance turned support. While there were no extended targets at the close, extended targets printed above price for most of the session as well as in the premarket, forecasting the strength of the day’s trend. Overnight the MSI rescaled higher but just before the open on news out of Microsoft the MSI rescaled to a wide-ranging state and then to a bearish narrow bearish state. There were no extended targets below so once again, the bulls stepped in and bought the dip at $679.60 pushing SPY toward the $685 level where the bears have no input whatsoever. The MSI ended the day in the same range as it started the session in a relatively narrow bullish state. But with extended targets, the MSI is forecasting higher prices are likely on Thursday but more of a grind than a major push to above this level. It’s likely we continue to see more two-way trading on Thursday with MSI support at $683.05 and lower at $687.15.
Key Levels and Market Movements:
On Tuesday we stated, “The market is coiling and preparing to break out in either direction. Given the strength of the trend, we continue to favor the bulls,” and added, “SPY is likely to remain in a narrow range between $675 and $685,” while also noting, “we will look for bounces toward $677 and also seek shorts up to $685 for another rangebound session, as the MSI is forecasting slightly higher prices. If the bulls hold $680 overnight, they are likely to make a run at $685.” With this context, and with the MSI trading in the premarket in a narrow bullish state with extended targets above, we wanted a clean long entry to join the prevailing trend. The news from Microsoft created that opportunity as price again tested support from the prior day at $679.50 and the premarket level at $679.60. With no extended targets below and a narrow bearish MSI, a clear failed breakdown formed and we went long at $680 with T1 at the premarket level of $681.60. Price approached T1, pulled back to our entry, and we held the position because we only move our stop once T2 is secured unless trading countertrend. The bulls stepped in and pushed price to T1, and we set T2 at MSI resistance at $682.20 which hit quickly. From there we moved our stop to breakeven and trailed, looking for a possible push toward $685. Just before 3 pm price touched $684.90, giving us the payoff we wanted, so we closed the position and ended the day. One and done and a nice one it was thanks again 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 once again was not an easy read given the large selloff before the open, but traders should look left to know what comes to the right, and the extended targets, overnight strength, very narrow bearish MSI without extended targets below, and a textbook failed breakdown were enough to give us confidence to go long, reinforcing the importance of reading these cues correctly. For tomorrow these cues suggest higher prices, yet there is a wall at $685 that the bulls must clear to push toward new all time highs, and if they do, longs are heavily favored over shorts although the move toward $690 will likely be a slog. A failure at $680 overnight will lead to a test of $677 and if that fails, price will likely accelerate lower toward $675 and possibly $670. The market is coiling and likely to break out in either direction this week, and given the strength of the trend we continue to favor the bulls while still watching for shorts on failed breakouts near $685. Crypto continued to recover which supports the bull case, but Mag stocks weakened on Microsoft’s news, so we suggest staying conservative until SPY reclaims $685 and monitoring these two leadership groups to confirm the bull trend remains intact for December. For Thursday we will look for bounces toward $680 and also seek shorts up to $685 for another rangebound session as the MSI is forecasting higher prices, and if the bulls hold $680 overnight, they are likely to make a run at $685 to take full control, but if $680 fails the market is likely to test lower levels. Macro risks remain, so traders should stay alert for news about Venezuela or other developments that could affect markets, and with the long-term bull trend intact above $640, we continue to favor the bulls and the larger trend as long as price holds above $680. 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 $687 to $705 and higher strike Calls while buying $684 to $686 Calls indicating the Dealers’ desire to participate in any continuation of the rally on Thursday. The ceiling for tomorrow appears to be $690. To the downside, Dealers are buying $683 to $565 and lower strike Puts in a 2:1 ratio to the Calls they’re selling/buying displaying little concern that prices could move lower tomorrow. Dealer positioning has changed from slightly bearish/neutral to neutral/slightly bullish.
Looking Ahead to Friday:
Dealers are selling SPY $684 to $700 and higher strike Calls indicating the Dealers’ belief that prices may not rally significantly higher by Friday. The ceiling for the week appears to be $690. To the downside, Dealers are buying $683 to $565 and lower strike Puts in a 4:1 ratio to the Calls they’re selling, reflecting a market that is less concerned about lower prices. For the week Dealer positioning has changed from bearish to slightly 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 $685, and avoid chasing strength without volume. Buy dips near $679–$680 with tight stops. Watch for failed breakout setups near $685 for short entries. Stay aligned with MSI and respect dealer bands. With the PCE report ahead, reduce exposure, trade smaller, and favor level-to-level setups. Maintain a bullish lean while SPY holds above $670.
Good luck and good trading!
