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
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
DECEMBER
The December forecast suggests a relatively flat month overall, with a period of market indecision expected between the 16th and 18th. The projected directional bias is to the upside, with the month—and the year—anticipated to close with some mild weakness in the final trading days.
DECEMBER’s DOI: 16th-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.
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 historical annual performance continue to support the outlook for a strong year overall, consistent with market behavior observed thus far. This structural bias aligns with prior cycles where the fifth year of each decade tends to outperform. Similarly, the Kitchin Cycle—a mid-range business cycle of approximately 40 months—suggests a broader upward trajectory is still in play, with the next cyclical peak anticipated around April 2027.
While the Presidential Cycle continues to indicate potential for weakness—particularly typical of the third year of a presidential term—there has yet to be a meaningful correction to validate that risk. As we approach year-end, markets may find some degree of stabilization in December, as is historically common.
The January Barometer, which offers a perspective on how January’s performance can influence the rest of the year, is currently suggesting a slightly negative month ahead. This is expected to play out as an early-month rally followed by a fade into month-end. Meanwhile, the Yearly Market Blueprint supports the idea of a sideways trading pattern through December, with a potential upside bias forming in the second half of the month.
Mid-Term View
Seasonality remains supportive. December ranks among the top-performing months, with a historical win rate of around 73% positive closes, and the trend bias continues to point upward. While seasonality does not guarantee outcomes, it does contribute to a broader context of optimism.
The Dow Jones Utility Average (DJU) appears to be signaling strength into early January, with underlying support holding firm. Aside from a brief and shallow pullback following a recent bottom, the structure suggests a constructive outlook until at least January 6th, 2026.
On the SPX Equal Weight Index (SPXEW), there’s little new to report. Both SPX and SPXEW continue to trade below their respective all-time highs. Importantly, we’ve yet to see a meaningful correction that could establish a potential higher low, which would formally mark the end of the broader downtrend and confirm a new structural base.
Sector-wise, XBD (Broker-Dealer Index) and XLP (Consumer Staples ETF) have both broken above their respective downsloping trendlines—often an early signal of a shift in sentiment. These breakouts may represent bottom formations and the beginning of a new upward phase, which could further support broad market strength in the coming weeks.
Short-Term View
From a technical standpoint, the long-standing black trendline and its associated slower-moving support/resistance bands continue to provide reliable reference points. Last week, price action engaged precisely with the second lower trendline, and has tracked it closely—offering a clear example of how well this framework continues to map market behavior.
The Open Interest (OI) Heat Map is highlighting a narrowing range, with price action moving closer to the upper OI cluster. As is often the case, these clusters can act as price magnets, attracting flow—but once reached, they also pose a risk of rejection due to order imbalances.
This contracting range is echoed by the VIX, which has been cooling off steadily since mid-November. It recently reached its lowest level since late September, reinforcing the view that directional conviction is strong. However, should the market enter a consolidation phase, 1–3 day volatility spikes are likely. These are typically the kind of sessions where traders attempt to fade strength or chase breakdowns—and often get punished for it.
What’s Ahead
This week presents a relatively clean setup for markets: no holidays, no options expirations, and no end-of-month flows to skew the tape. With mechanical drivers out of the way, focus turns to fundamentals as earnings warning season gathers pace, putting corporate guidance and pre-announcements under the spotlight. Adding to the mix, Wednesday brings the Fed’s interest rate decision—a potential volatility catalyst.
EVENTS
- 09th December 2025 15:00UTC JOLTs Job Openings
- 10th December 2025 19:00UTC FED Interest Rate Decision
- 10th December 2025 19:30UTC FED Press Conference
- 11th December 2025 13:30UTC Initial Jobless Claims
- 11th December 2025 13:30UTC PPI
Outlook & Expectations
For the upcoming week, I expect the market to continue following the trajectory established over the past several sessions. A more reliable signal should emerge around December 2nd, which is likely to offer greater clarity on whether a retracement is developing or if the upward trend will extend into mid-month. Should a decline begin around that date, a sharp but potentially brief move—lasting 2 to 3 days—could take the market down to test OI support levels at 6,746 or possibly as low as 6,648. On the other hand, if the downside scenario fails to play out, immediate resistance lies at the prior high from November 12th, 2025 at $6,869, followed by the next key level at $6,920 from October 29th, 2025.
I had been anticipating some market activity around December 2nd, but overall, there was little of note. The SPX Equal Weight Index (SPXEW) showed a modest sign of strength on that date—suggesting it still had some momentum—but nothing that warranted significant attention from my perspective. The S&P 500 did test the 6,869 level on Thursday, encountering a slight rejection, and Friday’s session remained close to that area without making a decisive move (close 6,870$).
A few days ago, I had a conversation with a friend who mentioned someone had described me as “doing the market.” In reality—jokes aside—it often feels more like the market is doing me. During our chat, he brought up a series of exotic indicators available on his charting platform—names I’d never heard of, pitched as “bulletproof” tools. I wish that were true; I’d sell everything I own to buy such an indicator. But the truth is more grounded: there is no perfect indicator. Every tool you see plotted is just a derivative of price—based on the open, high, low, or close. In essence, there’s little they can tell you that a candlestick chart doesn’t already contain. Indicators simply organize that data into a more digestible format. The more important question is: what is the indicator actually showing? Is it measuring trend or momentum? Or is it blending both? Simple moving averages are classic trend indicators—they highlight direction over time. RSI? Pure momentum. MACD? That’s more of a hybrid, capturing both momentum and trend-following characteristics. The key takeaway: don’t expect momentum indicators to tell you direction—they don’t. Before adding anything to your chart, ask yourself a basic question: Is this telling me direction, or energy?
Looking ahead to next week, there’s admittedly not much I can say with conviction. Why? Despite my usual habit of tuning out the headlines, the FOMC meeting on December 10th is set to take center stage. A rate cut is expected by the majority, but whether the Fed delivers is less certain. The recent government shutdown delayed key economic data releases, and without a full read on the macro picture, there’s a real possibility the Fed opts to wait.
Now, what that means for me might differ from what it means for you—but for this week’s outlook, I’ll keep it simple and focus on one technical observation.
Following the above conversation about charting and indicators, I revisited my higher time frame setups. The longer-term uptrend is still holding, but early signs of a hinge are forming—price is starting to level out, and the trend strength line is showing a modest decline. Momentum is softening as well. On the medium-term view, the trend still carries a slight downward bias from the past two weeks, but momentum has already started to recover. If that continues, the trend may follow—unless the dominant higher time frame steps in with a firm “you shall not pass.” On the short-term side, the trend is up and momentum remains intact, suggesting there’s still room for continuation.
Of course, everything could shift after December 10th. In a well-defined trend, markets typically digest major news within one to three sessions. But when higher time frames are flat or neutral, reactions—whether up or down—tend to last longer. That’s worth keeping in mind: if the market interprets the Fed’s move (or lack thereof) negatively, the follow-through may extend beyond the usual 1–3 day window.
If this article sparked a brain cell or two, you can say ‘Thanks’—ideally while caffeinating and pretending you’ve got this whole Market thing figured out. Consider buying me a coffee. It keeps this site running and caffeine flowing!
