Long-Term
Decennial Pattern & Performance
The table averages market performance for each calendar year ending in the same digit and shows how often those years closed up or down. We’re now in a year ending in 5, which has historically been the best-performing of the lot. Out of nine such years, the market closed higher eight times.
Please note that the up/down counts in the table reflect only the direction of the yearly close and do not distinguish between small or large gains or losses. A year marked as “up” may include increases as minimal as 0.1%.
| 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
| Avg % | 1.34% | 1.38% | 0.64% | 16.27% | 7.97% | 22.05% | 9.41% | 1.49% | 10.07% | 10.37% |
| Up/Down | 5/5 | 5/5 | 6/4 | 8/2 | 7/3 | 8/1 | 7/2 | 6/3 | 7/3 | 7/3 |
Kitchin Cycle
The Kitchin Cycle is a short-term business cycle lasting approximately 40.68 months, or about 3.4 years. First identified by economist Joseph Kitchin in the 1920s, it reflects recurring fluctuations in production and inventories. These cycles are driven by delays in information flow and business decision-making — companies respond to market signals with a lag, often overcorrecting by overproducing or underproducing. The result is a rhythmic, short-term economic pulse, distinct from longer cycles like Juglar or Kondratiev waves. Source: Technical Analysis Explained – Martin J. Pring.
| Last Forecast Date | Type | Actual Date | Actual Direction | Next Peak | Next Valley |
| 09/04/2025 | Valley | 07/04/2025 | Up untill next peak | 23/04/2027 | 08/12/2028 |
Presidential Cycle
Post-Election Year (Year 1):
The first year after an election often begins on a shaky footing. Investors face uncertainty as the new or continuing administration rolls out its agenda, which can spark heightened volatility. Markets tend to struggle in the early months, moving in a sluggish, uneven fashion before finding a firmer footing into late spring and summer. That rally phase is usually short-lived, as the market frequently rolls over into a sharp correction in the autumn months. By the end of the year, however, stocks often stabilize and manage to recover a portion of the earlier decline, leaving the overall year mixed or modestly positive.
Midterm Year (Year 2):
The second year is historically the most difficult. The weakness from late in Year 1 can spill over, and the first half of the year is often dominated by hesitancy, uneven growth, or outright declines. Political uncertainty around midterm elections tends to weigh on sentiment, while policy adjustments or tighter monetary conditions can add to the pressure. The turning point usually comes in the latter part of the year. By autumn, markets often carve out an important low, setting the stage for a strong rebound in the final quarter, as election results bring clarity and forward-looking investors position for the next phase of the cycle.
Pre-Election Year (Year 3):
The third year of the cycle is typically the strongest. The environment is generally characterized by policy support, as administrations often encourage growth and stability ahead of the coming election. Markets tend to respond with steady, broad-based advances that can last through much of the year. Pullbacks do occur, but they are usually shallow and quickly reversed, as the dominant tone is constructive. Investor confidence tends to be high, liquidity conditions are often favorable, and risk appetite expands. This combination makes Year 3 the most consistent bull phase of the four-year pattern.
Election Year (Year 4):
The final year of the cycle carries a more complex personality. The bullish momentum from Year 3 often extends into the opening months, but as campaigning heats up and polls shift, the market can grow unsettled. Volatility becomes more pronounced, with swings tied to election headlines, policy promises, or unexpected political developments. Despite this choppiness, the underlying trend tends to remain positive. Once the outcome of the election becomes clearer, markets usually regain their footing and push higher into year-end. Though less robust than Year 3, Election Years still often deliver respectable gains.
January Barometer
This is a modified interpretation of the classic January Barometer originally introduced by Yale Hirsch, which states: “As goes the S&P in January, so goes the year.” In this version, the focus shifts away from absolute direction and instead emphasizes potential inflection points, changes in trajectory, and the steepness of price movements. The directional bias of individual segments is intentionally disregarded, as historical reliability on that front remains questionable.
The core concept involves extrapolating January’s behavioral pattern across the entire calendar year — essentially “stretching” the market’s movements from January and projecting that rhythm through to December, as a framework for observing possible structural or psychological echoes in market behavior.
My Yearly Market Blueprint
This represents my yearly forecast. As noted earlier, the projected turning points have shown a reasonable degree of reliability — though, regrettably, the same cannot be said for directional accuracy. The blue line reflects the original forecast published in December 2024, the green line marks the revised outlook, and the red line tracks actual market behavior. Updated at EOM.
Mid-Term
Seasonal Patterns
Source: The Research Driven Investor by Timothy Hayes
The chart below illustrates the stock market’s seasonal tendencies — its historical propensity to rise or fall during each calendar month. We’ll use this as the primary basis for establishing a mid-term directional bias.
Note: While the chart on the left is based on the Dow Jones Industrial Average, the accompanying monthly performance table reflects data from the S&P 500. Similar to the yearly performance table above, keep in mind the usual caveats — seasonal patterns can inform bias, but they’re far from guarantees.
| JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC | |
| Avg. | 1.2% | -0.2% | +0.4% | +1.1% | 0.0% | +0.9% | +1.4% | +0.5% | -1.1% | +0.5% | +0.9% | +1.2% |
| % Up | 61% | 53% | 60% | 62% | 61% | 58% | 61% | 58% | 46% | 58% | 60% | 73% |
Sector Signals and Relative Strength
DJU
The Dow Jones Utilities Average (DJU) is used here as a leading indicator for potential weakness in the broader equity markets. While I can’t recall the original source of this idea, I’ll be sure to credit the author if and when it comes back to me. Through observation and analysis, I’ve found that the DJU often signals prolonged periods of market weakness approximately three months in advance of major indices like the S&P 500. This lead time is an average — typically around 55 trading days — with a buffer of roughly ±1 week to account for variability.
SPXEW & VALUA
Historically, divergence between the S&P 500 and broader measures such as the S&P 500 Equal Weight Index (SPXEW) has often served as an early warning signal for upcoming corrections in the S&P 500. While the S&P 500 is weighted by market capitalization, giving more influence to the largest companies, the SPXEW treats all 500 constituents equally, offering a more balanced view of overall market participation. These divergences tend to be more reliable when signaling tops rather than bottoms. Tops usually form gradually, allowing time for divergences to emerge. Bottoms, however, are often sharp and “V”-shaped, giving little warning. As a result, while this method can help identify downside risk, it’s far less effective at spotting recoveries or timing market lows.
XBD/SPY & XLP/SPY Relative Strenght
Source: Technical Analysis Explained – Martin J. Pring
Relative Strength (RS) is a technical metric used to evaluate the performance relationship between two securities. In the chart, we compare XBD (Securities Brokers – blue line) and XLP (Consumer Staples – inverted, orange line), both measured relative to the SPY.
Starting with XLP/SPY: XLP represents the Consumer Staples Select Sector SPDR. The underlying premise is that during bear markets, investors often seek refuge in consumer staples due to their defensive nature. Conversely, in bull markets, these stocks tend to underperform as capital shifts toward higher-growth, more speculative sectors. For this reason, the XLP/SPY line has been plotted in an inverted format, allowing for easier identification of divergences that often signal shifts in investor sentiment.
Now, turning to XBD/SPY: XBD represents the NYSE Arca Securities Broker/Dealer Index. Historically, this index has shown a tendency to lead market tops and bottoms. When the relative strength line peaks and begins to decline or move sideways, it often precedes a change in market trend—though the timing can vary. This change may result in a downturn or simply a period of consolidation. The inverse also holds true, with the index providing useful signals near market bottoms as well.
Monthly Forecasts
OCTOBER
To be honest, I don’t have “real” DOIs for October beyond the 2nd. What I see is a rise stretching into the 23rd, where we could hit a digestion phase—basically sideways action as profits get taken till the 29th were another leg up may take place. Those ranges I’ve marked are what I’d call turbulence dates: spots where I expect 1–2 candles to move against the main trend before the uptrend resumes within 3–4 candles. Eventually, this strong run will need to correct downward and shed some profits, but I suspect that won’t show up until the first week of November. So for October, think of those dates as either digestion points or possible reversals—it’s your call which one plays out.
OCTOBER’s DOIs: 2nd, 7th–9th, 15th–17th, 23rd, 29th.
October largely followed the anticipated trajectory, beginning with an initial rise that aligned with the signal identified in the final week of September. We saw a brief consolidation phase between October 7th and 9th, but the market action on the 10th disrupted the expected path and significantly challenged the forecast.
Despite that, the period from the 13th to the 17th marked another stretch of sideways movement, after which the market resumed a strong upward trend into month-end. Aside from a brief pause on the 22nd, the rally was largely uninterrupted.
Importantly, we haven’t seen any confirmed reversals yet—unless the down started on the 28th will continue.
NOVEMBER
At this stage, there isn’t much to add in terms of high-conviction signals for November. The current upward momentum may extend into the 6th, after which a consolidation or digestion phase could emerge, potentially lasting through the 10th.
From there, another leg higher is anticipated, likely carrying through to around the 18th, coinciding with the conclusion of the earnings-driven momentum. Beyond that, the market may shift into a more prolonged sideways phase, which could persist through the end of the month.
NOVEMBER’s DOI: 6th-10th, 18th.
DOIs: “DOI” refers to “Date of Interest” — a term used to highlight specific days when potential market reversals or periods of heightened volatility may occur. The methodology behind the identification of these dates has not been disclosed in previous publications and will remain confidential in future ones.
Short-Term
S&P500
This chart employs a simple yet effective methodology for identifying theoretical support and resistance zones. It calculates key levels based on fixed percentage moves from both the most recent significant high or low, as well as from the extreme points — either the lowest low or highest high — within the current trend structure. Additionally, it factors in speed deviations, both positive and negative, relative to the prevailing trend. These elements serve to identify potential zones where price action may stall, reverse, or accelerate, providing a structured framework for anticipating significant market reactions.
The following guidelines outline how to interpret the various types of support and resistance levels:
Lime Lines: Based on open interest (OI) calculations, these levels are extrapolated and typically regarded as resistance zones. Conversely, the accompanying blue lines in this context are interpreted as support levels.
Dashed Lines: These represent fixed percentage retracements, typically measured from the visible highest high to the lowest low on the chart.
Sloped Lines: Derived from the primary trend, which is selected at the author’s discretion. These lines reflect the directional bias and momentum of the prevailing trend.
Red and Blue Lines: Red lines indicate trendlines that move at a percentage rate faster than the main trend, while blue lines represent those that are slower. These help visualize relative acceleration or deceleration in price movement.
Purple Lines: If present, these mark subjective or discretionary levels of potential support or resistance identified by the author.
This chart displays a heat map of potential support and resistance levels derived from open interest in SPX options. The analysis takes into account various option characteristics, including expiration dates, moneyness, and strike distributions. The specific parameters and selection criteria have been determined at the author’s discretion and are not disclosed.
Darker areas on the heat map indicate a higher concentration of open interest, which may signal zones of market sensitivity. It’s worth noting that a significant portion of open interest—particularly in out-of-the-money puts below the current market price—is often used as part of hedging strategies by institutional participants and market makers. While these levels can act as potential areas of support or resistance, they should be interpreted as context rather than certainty, as not all open interest reflects directional intent.
VIX
For the VIX, I primarily focus on trendlines and channels, using closing or opening prices rather than highs or lows. I avoid indicators — the VIX tends to respect structure more than signals. The colored levels on my chart are straightforward: they serve as both support/resistance zones and trigger levels, depending on price behavior.
Summary
Long-Term View
The Decennial Pattern and broader annual performance continue to support the case for a strong year—consistent with what we’ve observed so far. The Kitchin cycle also points to an overall upward trajectory, with the next cyclical peak expected around April 2027.
However, both the Presidential Cycle and the January Barometer are signaling potential weakness as we move into November and December. In contrast, my current forecasts still favor another leg higher into mid-November, followed by a transition into a sideways phase that may carry through to month-end.
Mid-Term View
November has historically outperformed October, with an average gain of +0.9% and a 60% positive close rate. That seasonal strength may still play out, but market internals are showing mixed signals. The DJU peak from August 5th, 2025, remains intact—suggesting some underlying fragility. Meanwhile, the growing divergence between the S&P 500 and its equal-weight counterpart (SPXEW) continues to reflect narrowing participation.
Overall market engagement still appears muted. XBD/SPY relative strength remains in decline, indicating reduced activity. At the same time, XLP/SPY RS is rising—signaling a shift toward less defensive positioning, as capital begins moving away from staples and into relatively higher-beta sectors.
Monthly forecasts continue to suggest an upward trend, with some minor turbulence anticipated between the 6th and 10th, after which the up move is expected to resume and potentially extend through the 18th.
Short-Term View
The market remains aligned with the primary trendline, with immediate resistance positioned just overhead. Price action is currently engaging with the faster (red) trendline, suggesting an attempt to build momentum through this zone. However, initial support levels remain relatively distant, situated in the 6727–6652 range, which leaves some room for volatility should prices pull back.
From a structural standpoint, the broader uptrend remains intact. The market continues to post higher highs and higher lows, maintaining the technical definition of an uptrend despite short-term pressures.
Open Interest Heat Map data indicates a noticeable uptick in activity compared to last week, particularly concentrated around lower strike prices. This could reflect either fresh positioning or a layer of protective hedging, signaling that participants are preparing for potential shifts in direction or volatility ahead.
Volatility, as measured by VIX, remains within a stable (green) zone. However, a closer look reveals a subtle upward trend in the VIX lows over recent sessions. This quiet divergence from the market’s broader direction may suggest a cautious undercurrent building beneath the surface, warranting attention if the pattern continues
What’s Ahead
The upcoming week will be shaped primarily by ongoing earnings season, which continues to drive stock-specific and sector-level moves. With no holidays or major options expiration events on the calendar, broader market flow may be more directly influenced by earnings reactions and underlying investor positioning. That said, fund inflows and outflows could still play a secondary role in shaping intraday and cross-asset dynamics. Additionally, it’s worth noting that U.S. Daylight Saving Time ends on November 2nd.
EVENTS
- 04th November 2025 15:00UTC JOLTs Job Openings
- 06th November 2025 13:30UTC Initial Jobless Claims
- 07th November 2025 13:30UTC Unemployment Rate
Outlook & Expectations
There were no explicit forecasts for last week—just a reminder to watch the 27th and 29th for possible signals—and nothing dramatic materialized. We opened with a gap-up on Monday the 27th, and the all-time high printed on the 29th. SPXEW peaked on the 27th, so what you see depends on whether you track the cap-weighted S&P 500 or the equal-weight version.
Positive headlines and upside earnings are masking narrowing breadth that could reverse abruptly. A quick week-over-week check makes the point: SPXEW −1.5% vs S&P 500 +3.0% (as of writing while markets were still open). On its own, that’s not a sell signal; it needs confirmation.
Long-term: most frameworks don’t support a major decline (a couple of models do).
Medium-term: bias leans down over the next week(s).
Short-term: the uptrend remains intact after the 10/24 gap; the 10/27 gap is filled, while the 10/24 gap remains open. Resistance is just overhead, and the OI heat map suggests building downside pressure. Mega-cap earnings can still whipsaw the main indices (S&P 500, Nasdaq, Dow), which is why I don’t rely on them alone.
Tape read: Friday’s last two hours ramped from negative to ~+0.60% before sellers hit in the final 15 minutes. That argues for a possible bounce on Monday, but I expect the week to finish red. For continuation higher, I want a clean break and hold above 6906–6917; hesitation there signals weakness. If we break lower, first notable support (ignoring slower trendlines) sits near 6727—a sizable weekly move if tagged.
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