Hello again everyone, I hope you’re all doing well. As we prepare for the week ahead I wanted to offer up some biblical encouragement for anyone needing it. That encouragement is SPECTRUM. It’s an acronym I recently learned to read the Bible and I’m confident it will provide value to those looking into God’s word.
- S – Is there a sin to avoid?
- P – Is there a promise to hold on to?
- E – Is there an example to follow?
- C – Is there a command to obey?
- T – Is there a truth to know?
- R – Is there anything to repent of?
- U – Is there an upside to embrace?
- M – Is there a cause for thankfulness?
I hope as you read your Bible next you’ll remember this acronym to uncover the truth that may be there to receive. I know as I go forward I’ll be trying to remember and apply it as well.
That said, I wanted to take a few minutes today to discuss the state of the market 2025. It seems we’re experiencing a more significant pullback than we’ve had in quite some time and I’m sure you’re all echoing my own thoughts, where does it end?
In this post, we’re going to try and figure that out but before we do just know that I really have no idea.
Post Agenda
State of the Market: March 9, 2025
The stock market has been in a little bit of a freefall starting on February 20th, 2025. Since that day we’ve traded lower by about 6%. That’s 12 trading days of price moving mostly lower, though 3 of those days were actually bullish. As I write this tonight the futures have opened moderately lower also which may indicate a lower day tomorrow. Still, the last time we notched a similar decline in such a short time was in August & September of 2022.
That said, the real question is how far does this need to go before we find some support?
Monthly Analysis
Looking at the SPX monthly chart first to get an understanding of where we are long term it’s pretty clear we’re a lightyear away from the 200 period moving average. Even the entire bear market of 2022 didn’t bring us back into line with that level of reality, so I suspect this decline wouldn’t either. Here is the SPX monthly chart so you can see what I’m referring to.
You may have to click to enlarge that image or simply view it on your own trading platform but the bottom line is; for the last 15 years we’ve just moved further and further from that 200 period average line. Honestly, in my gut I sort of view that line as home base. A place I suspect one day we’ll revisit.
Now, that doesn’t mean we’re going to fall off a cliff back to that relative norm. I think policy makers and political leaders would attempt to avoid such a catastrophe, if at all possible. However, if you look at that chart in it’s entirety it has always scared me just how small the bear markets of 2000 and 2008 actually look.
In both of those periods SPX retraced about 50%. If we were to ever experience another 50% drop that would take SPX’s price back to around the $3000 area. Notably, that’s also very near the 200 moving average line which I don’t suspect is a coincidence.
Still, I don’t think anything today would suggest we’re looking at a bear market of that proportion. Someday maybe, but I just don’t see it today. Regardless, from that monthly chart there really are only about 3 different levels to highlight. They are;
$5674 – $5878 Support Range
We’re currently at this level and price could very easily find support here before continuing higher. However, given the current rate of decline I’m not completely confident the $5674 is going to stop the fall. My assumption is we continue further below this range as the market becomes increasingly bearish with each downward day.
Admittedly, we shouldn’t be all too surprised because even in the age of easy money or out right newly printed money there is always a limit to what exists. Sure, more may be printed and released into the economy but it’s never truly limitless. More time will have to elapse as the economy catches up to where we are now in that regard. To say that another way, It really feels like we’ve robbed Peter to pay Paul and enjoyed future returns today. I guess the jury is still out on that thought process.
$4953 – $5263 Support Range
As I write this tonight this range is looking very likely. I say that because the momentum of the current decline supports my thesis that the nearest support zone may not be enough to contain the accelerated decline. Of course, that’s just a hunch and we could easily begin moving higher tomorrow.
Truth be told, even this isn’t much of a support zone but it still qualifies so I’ve included it here. If price continues the dramatic decline into this range without finding more stability I’m doubtful this range would hold either.
$4222 – $4818 Support Range
That brings us to the final range I want to discuss from the monthly chart. Ideally, this level is in the past for good but I’m not convinced that’s realistic thinking. If price does find some stability above the $4953 level then I’ll concede this level isn’t as important as I currently feel that it is.
If you’re looking at the chart yourself you’ll see that I’ve highlighted this area as the top before the 2022 bearishness began. Not surprisingly, this level also coincides with another support level from a top in 2023. If more predictable market structure occurs again here then ultimately I see us finding better footing somewhere in this area. I really hope we don’t but we can’t say it’s out of the question.
Still, it’s a waiting game as we see what the state of the market 2025 really is. With that, let’s consider the weekly chart to find out what other less notable levels may exist for price to find a footing.
Weekly Analysis
If we take just the absolute low’s from each of the monthly ranges above that leaves us with $4222, $4953, and $5674 as potential anchor points for price to stabilize. While we haven’t technically breached the $5674 level, which is our first support area, price momentum does appear more significant than just a routine pullback. As such, I think it’s important to find out where on the weekly chart could price find a support. Here is the weekly chart for you to see and I’ve gone ahead and drawn the ranges from our monthly analysis to make it easier to see.
To begin, the good news is that the $5674 level is stronger than I’d originally assumed from the monthly chart. Since that level also coincides with a top put in during July 2024. I still don’t believe it will be enough to hold consistently strong down days but if price stalls here then it may well hold.
That said, I don’t see even one other area from the weekly chart that would provide additional help. However, the bright side of this chart is that 200 SMA doesn’t seem so far away, as we would expect. A pull back into that area would play nicely into our final, but also strongest, support area from the monthly chart. Again, I don’t want to revisit that area but we can’t rule it out.
That brings us to the daily chart, let’s see if any other areas jump off the chart at us there.
Daily Analysis
Since the weekly chart didn’t yield much fruit we’re left with the daily chart to uncover any additional support zones. Here is a chart of the SPX on a daily timeframe for you to view.
The only area from the daily chart worth point out, in my opinion, is at the $5402 level where I drew the thick white line. If you follow that line across you’ll see price whipsawed around that level from May to September of 2024. That isn’t a massive chunk of time but it isn’t insignificant either so I drew it here for review.
One thing I’ll point out from this chart is the noticeably flat market we’ve been in since November of 2024. If you scan from left to right of the SPX daily chart image you’ll notice that price is clearly moving higher with a few pullbacks in between. Then in November we hit a wall that has mostly held with only slight moves higher from that point.
As I look at this daily chart the next area I think we may see some support is near that white line at $5402. I just like to see areas where price has run around before when drawing support or resistance lines. If price did trade down to that level we’d be looking at about a 12% decline from the high of February 19th at $6147.43.
Finally, the lone bright spot from the daily chart or really any of these charts, is that price is right at the 200 SMA line while simultaneously being right inside our first support zone from the monthly analysis. That is very good news indeed but we’ll see what happens this week.
Final Thoughts
As I wrap up this state of the market 2025 post and the relative unknown we find ourselves looking into I think the consensus is bearishness ahead. At least for now. From the monthly chart, it looks to me like the $4953 – $5263 range is the most likely stopping ground. A decline to the very bottom of that range wouldn’t move us over the 20% mark which is where most “experts” declare a bear market.
Though, as I study this chart I can really see price stalling near that white line on the daily chart with possibly a long tail into that $4953 range before moving higher. Of course, that’s assuming the current support zone at $5674 doesn’t hold strong. The pace of the decline up to this point tells me that area won’t but it does have a number of things suggesting it will.
I guess what I’m saying is, I really don’t know, but if these levels offer any clues then this could be a make or break type of week for the market. If we don’t hold the current level then, as I see it, we’re in for another 6% leg down before finding the next area of support. If my overall thesis plays out, we’ll reach a bottom just before the 20% mark before seeing any significant pullups.
Finally, if you’re interested to play in this bearishness have a look at my favorite bearish strategies or if you want to get a more thorough analysis, here is a post from USBank that I enjoyed titled, “Is a Market Correction Coming?”.
Until the next post.
God bless,
Jeff
