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
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
Historically, November has outperformed October, averaging a +0.9% gain with a 60% frequency of positive closes. While that seasonal trend may still be in effect, internal metrics reflect a more mixed landscape. The recent decline, beginning in the final days of October, coincided with the 05/08/2025 turning point in the Dow Jones Utility Index (DJU). Although recovery behavior has not been backtested in this context, if the DJU signal proves accurate, a weaker or negative November would be consistent. A potential recovery or stabilization phase could develop during the first week of December, contingent on the DJU’s continued signal validity.
The SPX Equal Weight Index (SPXEW) did not produce notable developments; focus shifted to pattern behavior instead. The SP500 index briefly moved below its prior peak before turning higher, while SPXEW appears to be trading within a modestly upward-sloping channel.
In sector-based relative strength indicators, both XBD and XLP have reached structural levels indicative of a potential directional shift—XBD forming a relative bottom and XLP reaching a relative top. Note: the XLP line is presented in inverted format, representing capital inflows.
Monthly model projections anticipate volatility during the 6th–10th window, followed by a recovery into mid-month. Afterward, market behavior may transition into a sideways range, consistent with indications of underlying stability.
Short-Term View
Price action on November 2nd found support at the slower, upward-sloping secondary trendline, producing a reversal candle pattern consistent with a hammer formation. Multiple horizontal levels in that area—derived from open interest (OI) concentration and key percentage retracement zones—continue to provide structural support.
The OI Heat Map reflects a shift in positioning, with relatively lighter open interest at lower strikes compared to the previous week, and increased concentration at higher strikes. Despite short-term volatility, the broader uptrend remains intact, as evidenced by the continued formation of higher highs and higher lows—particularly visible on the simplified OI Heat Map.
The VIX recently touched the lower threshold of its predefined “caution rising” zone before retreating. The broader trend structure remains unchanged.
What’s Ahead
This week’s trading calendar presents a relatively neutral backdrop: no holidays, no month-end flows, no major options expiration events, and no distortion from scheduled rebalancing. With earnings season in full swing, individual equities may see volatility, but broader market structure remains unaffected by macro timing pressures. Notably, it’s the second Wednesday of the month—a key day for U.S. Treasury auctions. The 10-year note typically prices around 18:00UTC.
EVENTS
- 13th November 2025 13:30UTc Inflation Rate
- 13th November 2025 13:30UTc CPI
- 13th November 2025 13:30UTC Initial Jobless Claims
- 14th November 2025 13:30UTc PPI
Outlook & Expectations
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.
The anticipated bounce at the start of the week materialized with a strong opening; however, intraday selling pressure quickly reversed early gains. The session established a low at 6631, while the projected support level at 6727 held, with the market closing at 6728.
Weekly forecasts are typically based on mid- and short-term signals, although long-term indicators may occasionally be referenced. Based on current signal alignment and Friday’s candlestick structure, a modest rebound is expected, with potential resistance emerging near the high from October 10, 2025, at 6764. Should price action reject at that level, a subsequent decline may begin around Tuesday or Wednesday, with downside targets extending toward 6558. Intermediate support is identified at 6573. In the event of upward continuation, the next significant resistance is located at approximately 6861.
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