Market Insights: Tuesday, December 9th, 2025

Market Overview
Stocks closed mixed Tuesday as investors remained cautious ahead of Wednesday’s pivotal Fed decision, with sentiment shifting intraday following a surprise uptick in job openings. The Dow slid 0.4%, dragged lower by JPMorgan after executives flagged higher 2026 costs. The Nasdaq eked out a 0.1% gain, while the S&P 500 finished flat. Economic data showed layoffs rising alongside an increase in job openings, muddying the labor outlook just ahead of the FOMC. Expectations remain high for a quarter-point cut, with futures pricing in nearly 90% odds. However, uncertainty surrounds the Fed’s guidance for 2026, particularly with speculation that a Trump-appointed Fed chair could steer a more dovish course. Nvidia slipped after news that some H200 chip shipments to China will resume, while Tesla rose modestly on progress toward full-self driving. The Russell 2000 hit a new all-time high. Bitcoin hovered near $94,000, though strategists warned against chasing upside in the absence of clear Fed direction.

SPY Performance
SPY opened at $683.11, climbed to a session high of $685.39, dipped to a low of $682.61, and closed at $683.03, down 0.09%. Volume came in slightly below average at 50.22M, reflecting indecision and a lack of strong conviction ahead of Wednesday’s Fed statement. The day began with an attempt to break through resistance at $685, but repeated failures triggered a rollover that left SPY near its morning lows. With the index still inside the familiar $675–$685 range, price action remains coiled, and direction hinges on the Fed’s tone. The broader trend remains bullish above $640, but short-term sentiment has softened, and traders remain reluctant to commit in either direction without a catalyst.

Major Indices Performance
The S&P 500 closed flat, the Dow fell 0.37%, and the Nasdaq rose 0.13%. The Russell 2000 gained 0.24%, reaching a new record high as small caps continued to outperform. Mag 7 names were mixed with Microsoft, Alphabet, Amazon, and Tesla showing gains, while others declined. Tesla led the upside with a 1.28% move higher. Crude oil slipped 0.88% to $58.36, hovering above the key $56 level. Gold rose 0.53% to $4,240. Bitcoin gained 1.95% to close above $93,100, maintaining strength despite broader market hesitation.

Notable Stock Movements
Tesla led among large caps, gaining 1.28% as excitement builds around its full-self driving software milestone. Microsoft, Amazon, and Alphabet also saw modest gains, helping keep the Nasdaq afloat. Nvidia fell on news that H200 chip shipments to China would resume under new restrictions. JPMorgan dragged on the Dow after executives warned of rising 2026 costs tied to AI investment and credit card competition. Broader equity sentiment was mixed with a lack of enthusiasm ahead of Wednesday’s macro catalyst.

Treasury Yield Information
The 10-year Treasury yield edged up 0.34% to 4.187%, continuing its slow grind higher. Yields remain well below the 4.5% danger zone, but traders remain alert to hawkish surprises. A move toward 5% or above could significantly weigh on equities, with 5.2% likely to trigger a 20% or greater correction. For now, bonds appear stable but remain sensitive to Powell’s tone and dot plot.

Market Sentiment and Key Levels
SPY’s projected maximum range for Wednesday sits between $676 and $691, with Calls dominating in an expanding band. This signals potential for directional moves punctuated by intraday chop. Tuesday’s action was tight and mostly sideways until a late-day fade, typical of pre-FOMC hesitancy. SPY closed at $683.03, inside a tight $2.50 range. Overnight it tested $682.50 before rebounding to open flat. Resistance sits at $685, $686, $688, and $690, while support lies at $680, $677, $675, and $672. The broader trend remains intact above $640, but price may drift until the Fed delivers clarity. Above $686, gains are expected to slow due to heavy resistance. A break below $675 may expose $670. For Wednesday, we continue to favor longs from above $680 and short setups into strength near $688, though these levels may shift quickly post-FOMC.

Expected Price Action
Tuesday’s weak rally and failed breakout near $685 suggest ongoing hesitation. With no clear catalyst until Wednesday, SPY may continue grinding inside its established range. A loss of $680 overnight increases the odds of a move toward $675, while any rally above $685 may struggle without confirmation. Momentum is stalling, but no trend shift is confirmed. Expect low-volume chop with sharp bursts of direction once Powell speaks. With Mag 7 stocks mixed and crypto firm, the market is still leaning bullish—but only slightly.

Trading Strategy
Until the Fed speaks, trade light and tactical. Look to fade strength into $687–$689 with tight stops, and buy dips toward $682–$680 if support holds. Avoid overcommitting ahead of a binary event. Failed breakouts and breakdowns remain optimal setups. The MSI continues to guide execution with precision. Trust model levels, remain flexible, and don’t force trades.

Model’s Projected Range

SPY’s projected maximum range for Wednesday sits between $676 and $691, with the Call side dominating in an expanding band that signals trending action with periods of chop. Today the market moved sideways on very low volume and held inside a tight $2.50 range until a late-day selloff retested the session lows. SPY closed down 0.09% at $683.04. Overnight it attempted a small rally but sold off in the premarket to $682.50 before bouncing back to open flat. SPY then pushed toward $685, which acted as major resistance. After several failed attempts to break above $685.30, price rolled over and drifted back to the morning lows. The action was quiet and choppy, which is typical ahead of FOMC. As noted yesterday, SPY has returned to the $675–$685 range and may stay there until the Fed triggers a larger move. If $680 fails overnight, SPY may test $675, and a break there opens the door to $672. Volume was well below average, offering little confirmation. FOMC can move the market sharply in either direction, so traders must react to what unfolds. Absent a catalyst, resistance sits at $685, $686, $688, and $690, with support at $680, $677, $675, and $672. Above $686 gains should be muted due to heavy resistance. A break below $675 could send price toward $670. The broader trend remains bullish above $640. For Wednesday we still prefer longs from support above $680 while watching for shorts near $688, though FOMC may shift levels by $10 or more. Crypto rallied strongly today while Mag stocks were mixed. The market is likely to rise until real weakness appears in these two leadership groups. VIX rose 1.62% to 16.93 and remains neutral. Traders should stay flexible with a slight bullish lean, though price may hold steady until the Fed releases its decision. SPY closed mid-channel inside the redrawn bull trend, which still points to higher prices. 

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI ended the session in a narrow Bearish Trending Market State, with SPY closing at MSI support. There were no extended targets at the close, although there times both above and below the MSI where extended targets printed. But by 11 am these had ceased printing and the MSI spent most of the day in a wide-ranging state. Overnight the MSI rescaled lower which saw price attempt to retest the prior day’s lows. The bears couldn’t make that happen however and by the open, the MSI was in a ranging state which rescaled to a bullish state which held until noon. But after trying four times to break above $685, the bulls gave up and price fell with the MSI rescaling lower to a wide-ranging state and then to a bearish state in the last thirty minutes of the session. For tomorrow the MSI is forecasting slightly lower prices but without extended targets, expect more sideways than down price action until FOMC. MSI support is currently at $682.67 with resistance at $683.34.
Key Levels and Market Movements:
On Monday we stated “Tuesday may deliver more of the same as the market drifts sideways into FOMC,” and added “The bulls want to reclaim $685 but must first hold above $682 overnight,” while also noting “We expect price to attempt a push above $685, yet it is also likely to face major resistance holding above that level.” With this context, and with the MSI trading in the premarket at $682.37 as soon as extended targets stopped printing, and with the MSI in a narrow bearish state, we went long out of the gate at $683 and set T1 at MSI resistance at $684. T1 hit quickly and the MSI rescaled higher, so we set T2 at MSI resistance at $684.44. Another pop gave us T2 and all we had left was to trail for $685 with a stop at breakeven. Price did reach $685 and tested the level several times before we decided to reverse short to see if we could reach the premarket level of $683.80. That level was far from our entry but with the MSI in a wide ranging state, we had no other structure to lean on, so we held the position. SPY eventually reached the level before 1 pm and we set T2 at MSI support at $683.35. A small bounce followed but we stayed with the trade and T2 was secured by 2 pm, allowing us to move our stop to breakeven once again and trail to see if price might retest the overnight lows. And sure enough this is what happened so at the close, we exited our short for a massive winner, going 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 was messy, choppy, and difficult to trade, and many traders likely struggled to stay aligned with the trend. Tomorrow is likely to look the same until 2 pm, with price swinging both higher and lower ahead of the final FOMC meeting of the year. The announcement could move SPY ±$20 or do nothing at all, but we believe the real reaction will come after the press conference when the market interprets the Fed’s tone on rate policy. For Wednesday we favor the long trend until 2 pm while remaining open to shorting resistance at $685 and buying dips near $682, as everything between those levels is likely to be pure chop. After FOMC, the first flush below $680 is a dip we will buy if it recovers quickly, and the first push above $685 may be a trap we will look to fade. Traders must trade what they see and understand how FOMC days behave, and for those without experience, sitting out may be the smartest move. Crypto moved higher today while Mag stocks were mixed, showing the market is undecided heading into the event. We expect direction to firm up after FOMC and for the market to resume trending, likely higher. As always, remain alert to macro risks, and with the long-term bull trend intact above $640, we continue to favor the bulls 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 $684 to $705 and higher strike Calls indicating the Dealers’ belief that prices may not do too much tomorrow. The ceiling for Wednesday appears to be $690. To the downside, Dealers are buying $683 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 on Wednesday. Dealer positioning is unchanged from neutral/slightly bearish to neutral/slightly bearish but looks quite light in terms of volume so this can change materially on Wednesday.
Looking Ahead to Friday:
Dealers are selling SPY $684 to $709 and higher strike Calls indicating the Dealers’ belief that prices may not do too much the rest of the week. The ceiling for the week appears to be $695. 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 not overly 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
Use strength into $687–$689 to trim longs or initiate tactical shorts. Buy dips toward $682–$680 with defined risk. Until FOMC, respect the range and don’t overtrade. Stay focused on MSI levels and trust the model to guide execution. Avoid overcommitting ahead of Powell, and prepare for volatility starting Wednesday.

Good luck and good trading.