Market Insights: Friday, December 5th, 2025

Market Overview
Stocks moved higher on Friday as Wall Street reacted positively to a cooler reading in the Fed’s preferred inflation gauge, increasing confidence that the central bank will cut rates next week. The S&P 500 rose 0.19%, bringing it within striking distance of its first record close since October. The Nasdaq gained 0.31%, logging its fourth straight advance and marking the ninth positive close in the last ten sessions, while the Dow added 0.22%. Traders are now pricing in 87% odds of a 25-basis-point rate cut at the FOMC meeting, up from 62% just a month ago. Core PCE inflation rose 2.8% annually, meeting expectations and reinforcing the disinflationary trend. Meanwhile, consumer confidence ticked up for the first time in five months, and jobless claims fell to their lowest since September 2022, despite an increase in corporate layoffs. News of Netflix acquiring Warner Bros. Discovery's studios and streaming assets for $72 billion boosted media stocks, while earnings from Hewlett Packard Enterprise underwhelmed. Bitcoin slipped below $90,000, continuing its recent pullback from $93,000.

SPY Performance
SPY opened at $685.47 and closed up 0.19% at $685.69, trading between $684.58 and $688.39 on 57.52 million shares, right at average volume. Friday marked a modest gain but a meaningful close above the critical $685 level. Bulls attempted a breakout above $688 early in the day, but profit-taking capped the move and SPY drifted sideways for most of the session. The close above $685 shifts near-term control back to the bulls and sets up a potential breakout move next week, especially if the Fed delivers the expected rate cut.

Major Indices Performance
The S&P 500 rose 0.19%, the Nasdaq added 0.31%, and the Dow climbed 0.22%. The Russell 2000 was the outlier, falling 0.40%, continuing its recent underperformance. Sector-wise, tech led thanks to strong performances from Meta and the broader Magnificent Seven group, which was mostly green. Crude oil gained 0.79% to $60.14, and gold slipped 0.36% to $4,227. Bitcoin dropped 3.45% to close just above $89,100 as crypto weakness continued.

Notable Stock Movements
Meta rose 1.80%, leading the Mag 7 stocks, while Microsoft, Alphabet, and Apple all posted modest gains. Tesla and Nvidia traded mostly flat, and Netflix shares dipped slightly after announcing the massive Warner Bros. acquisition. WBD stock, however, rose 2% on the deal. Hewlett Packard Enterprise saw a mild uptick despite missing revenue expectations. Leadership from tech remains crucial for sustaining the broader bull trend, and Friday’s performance reinforced that narrative.

Treasury Yield Information
The 10-year yield rose 0.75% to close at 4.140%. Despite the small uptick, yields remain well below the critical 4.5% danger zone for equities. The recent stabilization in rates supports higher valuations, particularly in growth and tech names. The bond market appears aligned with expectations of easier policy ahead, but any surprise from the Fed next week could quickly shift sentiment.

Looking Ahead
All eyes now turn to next week’s macro events: ADP and JOLTS on Tuesday, followed by the FOMC rate decision and Powell’s press conference on Wednesday. Unemployment Claims and PPI round out the week on Thursday. With no scheduled news Monday or Friday, traders should expect positioning to dominate early-week flows. A dovish Fed tone and a rate cut could fuel a Santa Rally, while any hawkish surprises or signs of caution could trigger a sell-the-news reaction. Bulls have the momentum, but volume and confirmation remain key.

Market Sentiment and Key Levels
SPY closed at $685.69, above the critical $685 resistance level, shifting short-term control back to the bulls. The model’s projected range for Monday is $681 to $692. Resistance sits at $687, $690, $692, and $695, while support lies at $685, $680, $675, and $670. The $680–$690 band remains in play, and any break on volume will likely bring a directional push. Momentum favors bulls above $685, while a loss of $680 would shift bias back toward the bears.

Expected Price Action
Friday delivered the strongest breakout attempt yet, with SPY pushing above $688 intraday before settling just above $685. The market continues to coil in a tight band, but Friday’s action suggests a resolution may be near. Should SPY hold above $685 on Monday, we expect a push toward $690 and potentially $692. However, failure to hold $680 could drag price back to $675 or lower. The breakout scenario still favors the bulls, particularly with seasonality and Fed expectations on their side.

Trading Strategy
Maintain a long bias above $680, particularly near support at $682 or on dips below $685. Look for failed breakouts above $690 as tactical short entries, especially if volume fades. Avoid chasing strength or weakness mid-range. The best setups remain at defined support and resistance. Trade smaller into FOMC and remain disciplined. Until SPY breaks out of the $680–$690 band, trade tactically and respect MSI structure.

Model’s Projected Range

SPY’s projected maximum range for Monday sits between $681 and $692, with the Call side dominating in a narrow band that signals choppy price action with brief trending periods. Today the market again moved sideways in a tight range after attempting to break out above $685 and start a push toward the all-time highs. We suggested this breakout could come Thursday or Friday, and today the bulls made their strongest attempt yet to seize full control. SPY ended the session up 0.19% and closed at $685.69, just above the level where the bulls regain firm control. It is still early to know if this holds, but it is a key milestone for any December run at new highs. Overnight SPY pushed slightly higher, briefly reclaiming $685 before dropping to support at $684. The bulls bought that dip as well and lifted price to open just above $685, triggering a morning push to $688+ before profit taking pulled SPY back to unchanged, where it then traded in an extremely narrow range for the rest of the day. SPY has been trapped between $675 and $685 for a week, but today’s close above $685 shifts control to the bulls heading into next week. The market now waits for FOMC, where a rate cut could fuel a Santa Rally or become a sell-the-news event if already priced in. December is seasonally strong, and with the trend bullish, probabilities still favor higher prices. Sunday night and Monday premarket the bulls will aim to hold $680 to build on the rally. If $680 fails, especially after only one red day in two weeks, SPY may produce another red session into FOMC and test $678, with a break there opening the door to $675. Volume today was below average, which does not help the broader market. Absent a catalyst, resistance sits at $687, $690, $692, and $695, with support at $685, $680, $675, and $670. Above $687 gains should remain muted due to heavy resistance, while a break below $675 could send price toward $670. The broader trend remains bullish above $640, so for Monday we defer to that trend and prefer longs from support above $680 while watching for short setups near $690. Crypto fell today and Mag stocks were mixed, and as we have noted for weeks, the market is likely to continue rising until meaningful weakness returns in these two leadership groups. VIX fell 2.34% to 15.41 and remains in neutral territory awaiting a catalyst. Traders should stay flexible and trade what they see, leaning toward the bulls for continuation of the recent rally, though the closer we get to FOMC, the more likely the market simply holds steady until the announcement. SPY closed mid-channel within the redrawn bull trend, suggesting that higher prices remain likely.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in an extremely narrow Bullish Trending Market State, with SPY closing at MSI resistance. There were no extended targets at the close, and only a period in the first hour where extended targets were present. This pushed SPY to the day’s highs but once they stopped printing, the herd stepped back and prices fell to close unchanged. A very tight range from 11 am on with the MSI in a narrow bullish state which closed in a very narrow bullish state. Overnight the MSI rescaled higher and by the open, the MSI was forecasting higher prices for the day. SPY moved well above $685 but that didn’t hold and as quickly as it rose, SPY fell but did manage to close above $685, the level where the bulls regain complete control of the market. For Monday the MSI is forecasting more sideways price action which will likely encounter heavy resistance above $687 but also support at $682. MSI support is currently at $685.71 with resistance at $686.06.
Key Levels and Market Movements:
On Thursday we stated “we had forecast a sideways session and that is exactly what played out, and tomorrow could deliver more of the same or could break out on PCE, and a breakout is coming soon with the higher probability favoring the upside,” and added “we defer to the long trend but remain open to the possibility that the trend fails at major resistance at $685,” while also noting “the move toward $690 will likely be slow and choppy.” With this context, and with the MSI trading in the premarket above $685 but with brief periods of extended targets above, we wanted a way to get long to test how much strength remained in the bulls. A dip to $684 before the open that snapped back to $686 with extended targets above gave us that chance, so we entered long on a small pullback to $685.40 that approached MSI support even though the setup was not perfect. We set T1 at the premarket level of $686.70 to secure our minimum $1 target and then set T2 at the next premarket level of $688.20, which SPY hit exactly before stalling. Extended targets were still printing, so we did not short, but with no usable levels above we exited the long. A brief pause in extended targets at 10:42 prompted a short at the highs with T1 again at the $686.70 premarket level. Extended targets returned and nearly stopped us out, but SPY sold off sharply and delivered T1 quickly, allowing us to set T2 at MSI support at $686.06. With both targets hit we moved our stop to breakeven and trailed until 12:36, when SPY printed a clean failed breakdown at MSI support, prompting us to take profits and close the short. That proved wise as the market then traded in an extremely tight $1 range for the rest of the session. We love it when we end the week with two solid winners and once again realize our success is 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 was once again a messy sideways day after the first hour of excitement, and Monday could bring more of the same, but as long as price holds above $682 the market should continue to move toward new highs, while a break of $682 will test $680 and a failure there will likely produce a solid red day, only the second in two weeks. We expect price to retest today’s highs but also to fail there or slightly higher as the market waits for FOMC before making a major move, yet with the close above $685 the bulls have control and are likely to push SPY toward new highs in December. There is no meaningful news until Wednesday’s rate decision, so for Monday we defer to the long trend while remaining open to a failure at major resistance at $689 that could repeat today’s fade back toward $685. A break of $680 shifts probabilities toward lower prices in the very near term even though the broader plan from the bulls is a move toward $690, which will likely be slow and choppy. A failure at $680 overnight will lead to a test of $678, and if that breaks, price is likely to accelerate toward $675 and possibly $670. Crypto moved lower today and Mag stocks were mixed, so staying conservative into FOMC is wise, and monitoring these leadership groups will help confirm whether the December bull trend remains intact. For Monday we will look for bounces toward $682 and also seek shorts up to $690 for another rangebound session as the MSI is forecasting slightly higher prices. 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 $686 to $705 and higher strike Calls while also selling $685 Puts indicating the Dealers’ belief that prices may stagnate at current levels on Monday but are unlikely to close below $685. Dealers only sell ATM Puts if they are confident of higher prices. The ceiling for Monday appears to be $690. To the downside, Dealers are buying $684 to $565 and lower strike Puts in a 3:1 ratio to the Calls/Puts they’re selling displaying little concern that prices could move lower on Monday. Dealer positioning is unchanged from neutral/slightly bearish to neutral/slightly bearish.
Looking Ahead to Next Friday:
Dealers are selling SPY $686 to $709 and higher strike Calls indicating the Dealers’ belief that prices may rise slowly next week, potentially reaching new all time highs. The ceiling for the week appears to be $700. To the downside, Dealers are buying $685 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 is unchanged from slightly 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 $687–$689 and watch for failed breakouts into $690 for tactical shorts. Buy dips toward $682 with tight stops. Continue favoring the bull trend while remaining nimble as the market awaits next week’s macro events. Use MSI levels for execution precision and avoid overtrading in low-conviction ranges. Flexibility and discipline remain essential, with the broader trend intact and momentum on the bulls’ side.

Good luck and good trading!