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’ve now in the year ending in 6, which historically has closed in positive territory over 70% of the time. However, the average gains in such years tend to be more modest—especially when compared to the typically stronger performance seen in years ending in 5.
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% | 21.44% | 9.41% | 1.49% | 10.07% | 10.37% |
| Up/Down | 5/5 | 5/5 | 6/4 | 8/2 | 7/3 | 9/1 | 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
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.
January Barometer
The 2026 January Barometer will be available at the end of January 2026.
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.
Annual S&P 500 Forecast Overview
This chart presents my yearly forecast for the S&P 500 Index.
The percentage figures represent how often, in historically comparable years, the market printed its lowest low during a specific quarter. A key rule applies: Q1 lows are only included if they are lower than the lowest low recorded in Q4 of the preceding year, ensuring that only meaningful new lows are counted.
For example, a 50% reading in a given quarter indicates that, in half of the years studied, the annual lowest low occurred during that quarter. The highlighted months further refine this analysis by highlighting the specific months within those quarters where the lowest lows most frequently materialized.
Together, these elements provide a time-based framework for identifying periods where downside risk has historically tended to concentrate, rather than predicting precise price levels.
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 | 62% | 53% | 60% | 62% | 61% | 58% | 61% | 58% | 46% | 58% | 58% | 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.
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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) and XLP (Consumer Staples – plotted inverted), 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
FEBRUARY
The choppy, range-bound behavior observed in the final days of January may persist into around February 12, where a potential upside phase could begin to develop. If that advance materializes, it may extend toward February 24, after which the market could transition into a choppy, corrective decline, characterized more by uneven pullbacks and consolidation than a clean directional sell-off.
FEBRUARY’s DOI: 12th, 24th.
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 applies the same methodology as the previous one, using retracement levels from significant highs and extension levels from prior significant lows, alongside my own reference support and resistance areas. The key difference is presentation: rather than plotting individual lines, these levels are aggregated into a heat map. Where multiple support or resistance levels cluster, the band becomes thicker and more intensely colored, highlighting zones of higher technical relevance.
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.
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
Both the Decennial Pattern and long-term historical trends suggest that 2026 may prove positive for equities, although likely with more moderate gains than the exceptional performance seen in 2025. While returns may temper, the broader backdrop remains constructive for long-term investors, supported in part by the Kitchin Cycle, which continues to imply a mild upside bias and a gradual underlying strength.
That said, 2026 is also a U.S. midterm election year—historically a period associated with elevated uncertainty and episodic market weakness, particularly during the first half of the year. This tendency aligns with the current outlook, which anticipated early-January softness, a mid-month pullback, and a recovery phase that could extend through much of the first quarter.
The January Barometer signal for 2026 is now in place, and the current read points to a largely sideways market through July, followed by a potentially significant decline, and then a meaningful recovery into year-end. If this sideways phase develops as expected, opportunities may still emerge between February and July; however, the January Barometer will be used primarily as a “thermometer” in conjunction with other indicators, rather than as a standalone directional tool.
Mid-Term View
Seasonal and monthly performance statistics suggest February has historically been a less supportive period for equities. In the dataset referenced, February delivered only marginal performance, finishing higher only slightly more than half the time (about 53%), with an average return near -0.2%. Seasonality also tends to imply a firmer tone early in the month, followed by an increased probability of weakness into mid-February—consistent with early-month positioning giving way to profit-taking and sector rotation.
Within that context, the Dow Jones Utility Average (DJU) did not provide a notably strong January tailwind, despite the broader “best-months” concept that historically concentrates stronger equity performance in the late-fall through early-spring window (commonly framed as November through April). More generally, recent price action across major U.S. benchmarks has shown repeated attempts at selling pressure since mid-January that were met with fast dip-buying, helping keep indexes range-bound through earnings.
Breadth signals, as proxied by the S&P 500 Equal Weight Index (SPXEW) versus the capitalization-weighted S&P 500, have not shown a clear divergence or a distinct pattern that would materially alter the broader read. In relative-strength terms, the recent convergence between Consumer Staples (XLP) and broker/dealer exposure (XBD) coincided with a pullback that stabilized into Friday.
The S&P 500 support/resistance heatmap continues to show a heavier resistance band overhead relative to the near-term support zone immediately below current levels. In the open interest (OI) heatmap, the trading range has widened modestly versus the prior two weeks. Positioning has also shifted: concentration above spot has diminished, while OI has increased on strikes below, suggesting relatively greater emphasis on levels underneath the market.
Volatility remains a key variable. The VIX has been trending higher, including a breakout above the falling trendline highlighted on last week’s chart. The index also reached the “Caution Rising” zone, a level that historically has coincided with near-term stabilization, and it subsequently pulled back from that area.
What’s Ahead
With earnings season in progress, near-term price action is being driven primarily by company results and guidance rather than calendar-related catalysts. The week also lacks typical event-driven flows: there are no major options expirations, no market holidays, and no end-of-month rebalancing or month-end inflow/outflow effects to distort positioning. As the second Wednesday of the month, the session sits in a relatively “clean” part of the calendar, leaving fundamentals and earnings-related positioning as the dominant influences on intraday volatility and index direction.
EVENTS
- 11th February 2026 13:30UTC Unemployment Rate
- 12th February 2026 13:30UTC Initial Jobless Claims
- 13th February 2026 13:30UTC Inflation Rate
- 13th February 2026 13:30UTC CPI
Outlook & Expectations
Forecasts continue to suggest back-and-forth price action contained within 7,024 (resistance) and 6,851 (support). A daily close above resistance or below support would be the first development likely to shift my attention from observation to action; otherwise, the base case remains consolidation. The next DOI to monitor is February 12.
The S&P 500 weekly candle broadly tracked the forecast path. Price action was largely contained within the 7,024–6,851 range, with the upper boundary acting as an effective cap; however, a daily close below 6,851 drove an extension toward 6,780.
Among the monitored indicators, DJU is the only one currently pointing lower, while the remainder continue to lean higher. Near term, the setup allows for a firmer start to the week that retests the lower edge of the overhead resistance cluster on the OI/S&R work near 7,000.
The next potential inflection window is February 12 (DOI), followed by the CPI/inflation release on February 13. The market’s reaction to that data is inherently uncertain; operationally, a close above the resistance cluster on the S/R heatmap would be a constructive confirmation for long exposure. If momentum rebuilds, the move could extend into the next DOI window around February 24.
As earnings season winds down, and consistent with Edson Gould’s observation that a failure to rally during bullish seasonal periods can signal underlying pressure that asserts itself when the seasonal window ends, the probability of profit-taking increases later in the month. A downside scenario remains possible; if macro data or positioning triggers a broader risk-off response, late February becomes the next focal window.
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