Sentry Page Protection
Market/Model Commentary
Currently the active model portfolio as defined by our 5-factor model is:
ECAM 5-Factor Composite Model
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YELLOW |
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ECONOMIC FACTOR SUB-MODEL
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TECHNICAL FACTOR SUB-MODEL
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VALUATION FACTOR SUB-MODEL
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SENTIMENT FACTOR SUB-MODEL
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LIQUIDITY (Stress) FACTOR SUB-MODEL
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"Slow and Steady wins the race"
The Hare and the Tortoise
Aesop (Greek slave & fable author 620 BC - 560 BC)
"Technical Analysis is a windsock, not a crystal ball"
Carl Swenlin (Technical Analyst)
"Investing is the intersection of economics and psychology"
Seth Klarman (Hedge fund Manager, Baupost Group)
"Everyone's got a plan ..... until they get punched in the face"
Mike Tyson (Former World Heavyweight Boxing Champion)
The Hare and the Tortoise
Aesop (Greek slave & fable author 620 BC - 560 BC)
"Technical Analysis is a windsock, not a crystal ball"
Carl Swenlin (Technical Analyst)
"Investing is the intersection of economics and psychology"
Seth Klarman (Hedge fund Manager, Baupost Group)
"Everyone's got a plan ..... until they get punched in the face"
Mike Tyson (Former World Heavyweight Boxing Champion)
Latest Updates
DOW JONES GLOBAL INDEX
(09 October 2026)
Global equities were higher this past week with a percentage return (as measured by the Dow Jones Global Index) of +0.62%. This week price closed above the 40 week moving average and above price support @ 824.48.
Technical Analysis Summary (Dow Jones Global Index)
Click to set custom HTML
Dow Jones Global Index Historical Monthly Returns
Global equities closed the month of September with a loss of -1.6%. We are now within October which has historically been a strong month within the seasonal cycle:
- 22.2% cumulative percentage return over the past 26 years.
- 61.5% win percentage.
- greatest gain +10.5% (2011)
- greatest loss -19.9% (2008)
Weekly Global Macro Review
U.S. Equities
Major U.S. stock indexes finished the week mixed amid volatility in artificial intelligence (AI)-related stocks, developments in the Middle East, and sharp moves in energy prices and Treasury yields.
Major U.S. stock indexes finished the week mixed amid volatility in artificial intelligence (AI)-related stocks, developments in the Middle East, and sharp moves in energy prices and Treasury yields.
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S&P 500:
DJIA: NASDAQ 100: S&P 400 Mid-cap: Russell 2000 Small Cap: |
+1.2%
+0.9% +0.2% +0.0% -0.9% |
Oil prices were volatile throughout the week as investors weighed developments in the Middle East and the outlook for energy supply. Crude prices moved lower midweek following news that the International Energy Agency would accelerate a planned release of oil reserves. However, prices rallied sharply Thursday amid reports of further attacks on tankers in the Strait of Hormuz and speculation that the U.S. was considering additional military strikes against Iran. Brent crude briefly topped USD 105 per barrel on Thursday before retreating somewhat after President Donald Trump said that the U.S. would not attack Iran ahead of November’s midterm elections, though reports of additional attacks on Friday drove continued volatility.
Minutes from the Federal Reserve’s September policy meeting—where officials unanimously voted to raise interest rates by 25 basis points (0.25 percentage points)—showed that most policymakers anticipated another rate increase by year-end amid persistent inflation pressures. However, the minutes provided little clarity on the timing of the next increase, noting that “decisions at future meetings would depend on incoming information.” Fed Governor Christopher Waller echoed this sentiment on Thursday, saying that he expects the Fed to continue raising interest rates to combat inflation but that “there is some flexibility about when those hikes will occur.”
Economic data released during the week also highlighted continued inflation pressures. The Institute for Supply Management reported that its services Purchasing Managers’ Index (PMI) remained in expansion territory in September, coming in at 54.9 versus 55.4 in August. However, the survey’s prices index climbed 1.4 points to 74.0, its highest level since July 2022.
Separately, the New York Fed’s Survey of Consumer Expectations showed that year-ahead inflation expectations rose to 3.9% in September, the highest since May 2023. Meanwhile, the University of Michigan’s preliminary October Index of Consumer Sentiment reading dropped to a five-month low of 46.3, while year-ahead inflation expectations edged up to 4.7%.
US Bonds
U.S. Treasuries were volatile during the week as investors assessed geopolitical developments, persistent inflation concerns, and the prospect of additional monetary policy tightening from the Fed. Yields on the 10-year and 30-year U.S. Treasuries rose to their highest levels since 2002 before retreating after stronger-than-expected auctions, while President Trump’s promise to not attack Iran ahead of November’s midterm elections also appeared to be supportive. (Bond prices and yields move in opposite directions.)
Meanwhile, investment-grade corporate bonds outperformed Treasuries for most of the week, and new issues were generally oversubscribed. The high yield bond market was volatile amid renewed inflation concerns, rising oil prices, and higher Treasury yields.
Minutes from the Federal Reserve’s September policy meeting—where officials unanimously voted to raise interest rates by 25 basis points (0.25 percentage points)—showed that most policymakers anticipated another rate increase by year-end amid persistent inflation pressures. However, the minutes provided little clarity on the timing of the next increase, noting that “decisions at future meetings would depend on incoming information.” Fed Governor Christopher Waller echoed this sentiment on Thursday, saying that he expects the Fed to continue raising interest rates to combat inflation but that “there is some flexibility about when those hikes will occur.”
Economic data released during the week also highlighted continued inflation pressures. The Institute for Supply Management reported that its services Purchasing Managers’ Index (PMI) remained in expansion territory in September, coming in at 54.9 versus 55.4 in August. However, the survey’s prices index climbed 1.4 points to 74.0, its highest level since July 2022.
Separately, the New York Fed’s Survey of Consumer Expectations showed that year-ahead inflation expectations rose to 3.9% in September, the highest since May 2023. Meanwhile, the University of Michigan’s preliminary October Index of Consumer Sentiment reading dropped to a five-month low of 46.3, while year-ahead inflation expectations edged up to 4.7%.
US Bonds
U.S. Treasuries were volatile during the week as investors assessed geopolitical developments, persistent inflation concerns, and the prospect of additional monetary policy tightening from the Fed. Yields on the 10-year and 30-year U.S. Treasuries rose to their highest levels since 2002 before retreating after stronger-than-expected auctions, while President Trump’s promise to not attack Iran ahead of November’s midterm elections also appeared to be supportive. (Bond prices and yields move in opposite directions.)
Meanwhile, investment-grade corporate bonds outperformed Treasuries for most of the week, and new issues were generally oversubscribed. The high yield bond market was volatile amid renewed inflation concerns, rising oil prices, and higher Treasury yields.
Europe/UK Equities
The pan-European STOXX Europe 600 Index ended the week broadly unchanged, up +0.03% in local currency terms. European equities were volatile as renewed Middle East tensions, a more hawkish European Central Bank (ECB) backdrop, mixed eurozone industrial data, and softer UK activity indicators shaped investor sentiment over the week.
The pan-European STOXX Europe 600 Index ended the week broadly unchanged, up +0.03% in local currency terms. European equities were volatile as renewed Middle East tensions, a more hawkish European Central Bank (ECB) backdrop, mixed eurozone industrial data, and softer UK activity indicators shaped investor sentiment over the week.
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German DAX:
French CAC: Italian MIB: Spanish IBEX: U.K. FTSE 100: |
-0.6%
-1.2% -1.5% -0.3% +0.9% |
Minutes from the ECB September meeting indicated that policymakers believed inflation risks were skewed to the upside when they raised interest rates for the first time since 2023. The minutes acknowledged that “inflation was set to remain well above target for an extended period” and that “the full inflationary impact of the energy shock had yet to play out.” The central bank also noted that it was “neither suggesting that the current decision was another step in a predetermined tightening cycle nor that it was the last rate hike.”
Germany’s exports fell 0.8% month on month in August. This was below the 0.5% drop recorded in the previous month and the 0.6% increase that had been expected. Germany’s factory orders fell sharply in August, tumbling 10.6% month on month. In contrast, industrial production in the country climbed 2.0% month on month in August. This was a rebound from the 1.2% drop experienced in July.
Official data showed that French industrial production declined by 0.3% month on month in August. This was in contrast to the 0.3% rise that had been expected. Extractive industries, energy, and water were particularly weak, down 2.4% due to lower electricity production.
The UK Composite PMI declined to 52.0 in September, down from 52.5 in August. This was marginally weaker than expected. The data showed that activity was still in expansionary territory but that the pace of growth has slowed.
The Lloyds House Price Index showed that UK house prices were stagnant both month over month and year over year in September. This followed a 0.3% monthly decline in August.
Germany’s exports fell 0.8% month on month in August. This was below the 0.5% drop recorded in the previous month and the 0.6% increase that had been expected. Germany’s factory orders fell sharply in August, tumbling 10.6% month on month. In contrast, industrial production in the country climbed 2.0% month on month in August. This was a rebound from the 1.2% drop experienced in July.
Official data showed that French industrial production declined by 0.3% month on month in August. This was in contrast to the 0.3% rise that had been expected. Extractive industries, energy, and water were particularly weak, down 2.4% due to lower electricity production.
The UK Composite PMI declined to 52.0 in September, down from 52.5 in August. This was marginally weaker than expected. The data showed that activity was still in expansionary territory but that the pace of growth has slowed.
The Lloyds House Price Index showed that UK house prices were stagnant both month over month and year over year in September. This followed a 0.3% monthly decline in August.
Japan
Japan’s stock markets gained over the week, with the Nikkei 225 Index rising +1.1% and the broader TOPIX Index up +0.3%. Equities rallied strongly early in the period, led by AI- and semiconductor-related shares, as recent weaker-than-expected U.S. employment data reduced expectations for a near-term Federal Reserve rate hike and lifted global technology stocks. Those gains partially reversed later in the week as investors reassessed AI-related valuations and growth expectations. Concerns over Japan’s fiscal outlook, persistently high bond yields, yen weakness, and rising oil prices amid renewed Middle East tensions also weighed on sentiment.
The yield on the 10-year Japanese government bond fell to 3.01%, from 3.09% at the end of the previous week. Despite the week’s decline, yields remained elevated amid concerns over Japan’s debt burden and the fiscal implications of the government’s policy agenda. Prime Minister Sanae Takaichi sought to reassure investors over Japan’s fiscal outlook, pledging to control bond issuance and stressing that fiscal sustainability remained a prerequisite for the government’s responsible and proactive fiscal policy.
Among the week’s economic releases, data pointed to continued improvement in household purchasing power that has yet to translate into a sustained recovery in consumption. Average nominal wages rose 3.8% year over year in August, slightly ahead of consensus expectations for 3.7%, although growth slowed from a revised 4.3% in July. Real wages increased 1.5% in line with expectations and down from a revised 2.0% in the prior month. Household spending nevertheless remained weak: Expenditures fell 3.1% year over year versus an expected 3.6% decline and the prior month's 3.6% drop, while seasonally adjusted spending rose just 0.1% month over month versus expectations for a 0.5% increase.
China
Chinese equities diverged during a holiday-shortened trading week, with mainland shares declining while Hong Kong recovered to finish higher. The CSI 300 Index fell -0.9% and the Shanghai Composite Index declined -0.7% from their September 30 closes while the Hang Seng Index rose approximately +1.0% in local currency terms. Mainland exchanges reopened on Thursday after being closed from October 1 to 7 for the National Day Golden Week holiday, with technology shares leading losses amid elevated global bond yields, higher oil prices, and renewed concerns over potential U.S. restrictions on Chinese optical communications products. In Hong Kong, energy shares benefited from higher oil prices earlier in the week, while a sharp rebound in internet and technology stocks on Friday, alongside easing oil prices, helped lift the Hang Seng into positive territory.
Mainland technology stocks were among the week's main laggards, particularly semiconductors, artificial intelligence hardware, and optical communications companies. On Thursday, the technology-heavy STAR 50 Index plunged 4.8% as rising global yields and oil prices pressured growth stocks, while speculation about possible U.S. restrictions on advanced Chinese optical transceivers added to selling pressure. Losses extended into Friday morning before mainland benchmarks rebounded in the afternoon, led by areas such as media and entertainment, accompanied by a sharp increase in trading volumes in broad market exchange-traded funds.
China's seven-day National Day holiday saw 826 million domestic tourist trips, up 6.3% year over year, generating RMB 738.4 billion in tourism revenue, an increase of 4.3%, with both growth rates calculated on a comparable daily-average basis, according to the Ministry of Culture and Tourism. The slower growth in spending relative to visitor numbers, alongside weaker holiday box office receipts, suggested that household demand remained uneven rather than signaling a broad-based consumption recovery. Attention now turns to China's third-quarter gross domestic product release on October 19 and the Communist Party's fifth plenum on October 26 to 29 for further indications of the economic backdrop and broader policy direction.
Japan’s stock markets gained over the week, with the Nikkei 225 Index rising +1.1% and the broader TOPIX Index up +0.3%. Equities rallied strongly early in the period, led by AI- and semiconductor-related shares, as recent weaker-than-expected U.S. employment data reduced expectations for a near-term Federal Reserve rate hike and lifted global technology stocks. Those gains partially reversed later in the week as investors reassessed AI-related valuations and growth expectations. Concerns over Japan’s fiscal outlook, persistently high bond yields, yen weakness, and rising oil prices amid renewed Middle East tensions also weighed on sentiment.
The yield on the 10-year Japanese government bond fell to 3.01%, from 3.09% at the end of the previous week. Despite the week’s decline, yields remained elevated amid concerns over Japan’s debt burden and the fiscal implications of the government’s policy agenda. Prime Minister Sanae Takaichi sought to reassure investors over Japan’s fiscal outlook, pledging to control bond issuance and stressing that fiscal sustainability remained a prerequisite for the government’s responsible and proactive fiscal policy.
Among the week’s economic releases, data pointed to continued improvement in household purchasing power that has yet to translate into a sustained recovery in consumption. Average nominal wages rose 3.8% year over year in August, slightly ahead of consensus expectations for 3.7%, although growth slowed from a revised 4.3% in July. Real wages increased 1.5% in line with expectations and down from a revised 2.0% in the prior month. Household spending nevertheless remained weak: Expenditures fell 3.1% year over year versus an expected 3.6% decline and the prior month's 3.6% drop, while seasonally adjusted spending rose just 0.1% month over month versus expectations for a 0.5% increase.
China
Chinese equities diverged during a holiday-shortened trading week, with mainland shares declining while Hong Kong recovered to finish higher. The CSI 300 Index fell -0.9% and the Shanghai Composite Index declined -0.7% from their September 30 closes while the Hang Seng Index rose approximately +1.0% in local currency terms. Mainland exchanges reopened on Thursday after being closed from October 1 to 7 for the National Day Golden Week holiday, with technology shares leading losses amid elevated global bond yields, higher oil prices, and renewed concerns over potential U.S. restrictions on Chinese optical communications products. In Hong Kong, energy shares benefited from higher oil prices earlier in the week, while a sharp rebound in internet and technology stocks on Friday, alongside easing oil prices, helped lift the Hang Seng into positive territory.
Mainland technology stocks were among the week's main laggards, particularly semiconductors, artificial intelligence hardware, and optical communications companies. On Thursday, the technology-heavy STAR 50 Index plunged 4.8% as rising global yields and oil prices pressured growth stocks, while speculation about possible U.S. restrictions on advanced Chinese optical transceivers added to selling pressure. Losses extended into Friday morning before mainland benchmarks rebounded in the afternoon, led by areas such as media and entertainment, accompanied by a sharp increase in trading volumes in broad market exchange-traded funds.
China's seven-day National Day holiday saw 826 million domestic tourist trips, up 6.3% year over year, generating RMB 738.4 billion in tourism revenue, an increase of 4.3%, with both growth rates calculated on a comparable daily-average basis, according to the Ministry of Culture and Tourism. The slower growth in spending relative to visitor numbers, alongside weaker holiday box office receipts, suggested that household demand remained uneven rather than signaling a broad-based consumption recovery. Attention now turns to China's third-quarter gross domestic product release on October 19 and the Communist Party's fifth plenum on October 26 to 29 for further indications of the economic backdrop and broader policy direction.
Weekly Performance
U.S. Indices
Dow +0.9% to 51,655. S&P 500 +1.2% to 7,812. Nasdaq +0.6% to 27,366. Russell 2000 -0.9% to 2,807. CBOE Volatility Index -3.1% to 14.84.
S&P 500 Sectors
Consumer Staples +4%. Utilities +3.9%. Financials +2.3%. Telecom +0.8%. Healthcare +2.8%. Industrials -0.4%. Information Technology -0.3%. Materials +1.4%. Energy +3.6%. Consumer Discretionary +3.1%. Real Estate +1.8%.
World Indices
London +0.9% to 10,552. France -1.2% to 7,803. Germany -0.6% to 25,087. Japan +1.1% to 69,031. China -0.7% to 3,814. Hong Kong +1% to 24,211. India +0.8% to 72,472.
Commodities and Bonds
Crude Oil WTI +0.6% to $91.66/bbl. Gold +1.4% to $4,220.3/oz. Natural Gas +5.4% to 3.2. Ten-Year Bond Yield -0.2 bps to 5.244.
Forex and Cryptos
EUR/USD -0.46%. USD/JPY +0.3%. GBP/USD -0.08%. Bitcoin -2.3%. Litecoin -9.1%. Ethereum -7%. XRP -5%.
Dow +0.9% to 51,655. S&P 500 +1.2% to 7,812. Nasdaq +0.6% to 27,366. Russell 2000 -0.9% to 2,807. CBOE Volatility Index -3.1% to 14.84.
S&P 500 Sectors
Consumer Staples +4%. Utilities +3.9%. Financials +2.3%. Telecom +0.8%. Healthcare +2.8%. Industrials -0.4%. Information Technology -0.3%. Materials +1.4%. Energy +3.6%. Consumer Discretionary +3.1%. Real Estate +1.8%.
World Indices
London +0.9% to 10,552. France -1.2% to 7,803. Germany -0.6% to 25,087. Japan +1.1% to 69,031. China -0.7% to 3,814. Hong Kong +1% to 24,211. India +0.8% to 72,472.
Commodities and Bonds
Crude Oil WTI +0.6% to $91.66/bbl. Gold +1.4% to $4,220.3/oz. Natural Gas +5.4% to 3.2. Ten-Year Bond Yield -0.2 bps to 5.244.
Forex and Cryptos
EUR/USD -0.46%. USD/JPY +0.3%. GBP/USD -0.08%. Bitcoin -2.3%. Litecoin -9.1%. Ethereum -7%. XRP -5%.
WEEKLY ASSET CLASS MONITOR
(week ending 09 October 2026)
(week ending 09 October 2026)
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Asset Class
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Region
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ETF Ticker
|
Weekly
Return |
2026 Return
(inc. Dividends) |
|
Equities
|
World
U.S. Europe Asia Pacific ex-Japan Emerging Market |
VT
VTI VGK AAXJ VWO |
+0.44%
+1.05% -0.41% -2.25% +0.34% |
+14.28%
+14.89% +5.05% +24.52% +11.50% |
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Bonds
|
U.S. Bonds
International Bonds Global Bonds |
BND
BNDX BNDW |
+0.40%
+0.26% +0.33% |
-2.28%
-0.70% -1.52% |
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Real Estate Equities
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Global Real Estate Equities
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REET
|
+0.20%
|
+5.10%
|
|
Precious Metals Equities
|
Global Gold Miners
Global Junior Gold Miners |
RING
GDXJ |
+1.77%
+0.69% |
+6.80%
+0.57% |
GLOBAL EQUITY MARKET MONITOR
The past 5 years have been very challenging for global equities. They had a wicked roller-coaster ride in 2020 on the back of the Covid pandemic where they peaked on 12 Feb 2020 and fell dramatically (-34%) into their 23 Mar lows. They then rebounded and regained their losses by year-end.
For most of 2021 they remained largely in a "holding pattern" digesting their gains but declined considerably throughout 2022 before bottoming in October. Strong returns have been seen since the Oct/22 bottom with a significant drop/rise "V" reversal in April 2025 as US tariffs were announce and then revised lower as the year progressed.
At present the war in the Middle East is whipsawing all markets as oil price increases have a pronounced effect upon inflation with another "V" reversal having occurred in Mar 2026; with regions remaining rangebound since May 2026 to present.
For most of 2021 they remained largely in a "holding pattern" digesting their gains but declined considerably throughout 2022 before bottoming in October. Strong returns have been seen since the Oct/22 bottom with a significant drop/rise "V" reversal in April 2025 as US tariffs were announce and then revised lower as the year progressed.
At present the war in the Middle East is whipsawing all markets as oil price increases have a pronounced effect upon inflation with another "V" reversal having occurred in Mar 2026; with regions remaining rangebound since May 2026 to present.
Asset Class Return Monitor
(for week ending 09 October 2026)
(for week ending 09 October 2026)
Equities Legend:
Bonds Legend:
Currencies Legend:
Commodities Legend:
- Vanguard Total World Stock ETF (VT): (Cyan)
- Vanguard Total U.S. Stock Market ETF (VTI): (Red)
- Vanguard FTSE Europe ETF (VGK): (Lime Green)
- Ishares MSCI Asia ex-Japan ETF (AAXJ): (Dark Blue)
- Vanguard FTSE Emerging Markets ETF (VWO): (Pink)
Bonds Legend:
- Vanguard Total U.S. Bond Market ETF (BND): (Black)
- Vanguard Total International ex-U.S. Bond ETF (BNDX): (Green)
Currencies Legend:
- U.S. Dollar Index (Cash Settlement EOD) ($USD): (Orange)
- Euro (Philadelphia Index) ($XEU): (Maroon)
Commodities Legend:
- PowerShares DB Commodity Index Tracking Fund (DBC): (Purple)
- SPDR Gold ETF (GLD): (Sky Blue)
Past Week Asset Class returns
- Over the past week global equities (as measured by the Vanguard Total World Stock ETF (shown in CYAN) gained +0.44%.
- US markets were the top performing equity region this past week with European markets lagging.
- U.S. bonds (Black) and International bonds (Green) were higher on the week.
- Commodities were higher on the week with the U.S. Dollar index up +0.30%.
Year-to-Date (2026) Asset Class returns
- In 2026 global equities (as measured by the Vanguard Total World Stock ETF shown in CYAN) have gained +14.28%.
- Asia Pacific ex-Japan market equities are the top performing equity region year-to-date with European markets lagging.
- Bonds have had lower returns in 2026 with U.S. bonds (Black) under-performing International Bonds (Green).
- The US Dollar index has gained +4.02% year-to-date.
The stock market is driven by a combination of corporate profits, trends, economic data, fund flows, expectations, greed, fear, opinions, analysis, geopolitical events and human nature. These variables are often in conflict with one another (especially in the short run) and form a sine-wave cycle of investor psychology which begins with optimism, peaks with euphoria, bottoms with despair and returns to optimism.
It must be reemphasized a complete market cycles is composed of 2 distinct cycles/phases: a "bull 1/2 cycle" and a "bear 1/2 cycle".
The Math of Losses
- a 20% loss requires a 25% gain to return to breakeven
- a 30% loss requires a 43% gain to return to breakeven
- a 40% loss requires a 67% gain to return to breakeven
- a 50% loss requires a 100% gain to return to breakeven
- a 60% loss requires a 150% gain to return to breakeven
This is why it is so important to not let losses continue in the face of a bear market decline and why we advocate phased movements into cash as our 5-factor model reverts to Red. The below graphic represents how we move within equity markets through a complete sine-wave market cycle:
World Regional Equity Monitor
We use the following U.S. exchange traded funds to monitor equity performance for the various world regions:
- World Equities: Vanguard Total World ETF (Cyan)
- U.S. Equity: Vanguard Total Market ETF (Red)
- European Equity: Vanguard FTSE Europe ETF: (Lime Green)
- Japan Equity: iShares Japan ETF (Black)
- Asia ex-Japan Equity: iShares MSCI All-Country Asia ex-Japan ETF (Blue)
- Emerging Market Equity: Vanguard FTSE Emerging Market ETF (Pink)
1 Year Rolling Regional Equity Performance
- Over the past 12 month rolling period regional equity performance has been positive for monitored regions.
- Overall world equity performance (as measured by the Vanguard Total World ETF) have returned +17.12% (including dividends) over the past 12 month rolling period.
3 Month Rolling Regional Equity Performance
- Over the past 3 month rolling period the strongest performing world equity region has been Japanese markets with European markets the weakest.
- Mixed equity returns have been evident over the past quarter (3 months) in monitored regions.
1 Month Rolling Regional Equity Performance
- Over the past 1 month rolling period the strongest performing world equity region has been US markets with European markets the weakest.
- Mixed equity returns have been achieved over the past month for monitored regions.
Past Week Regional Equity Performance
- Over the past week the major global equity regions were mixed with US markets outperforming other regions.
Latest Global Equity "Big Picture"
World equity market returns are monitored via the following index and ETF equity charts:
- Dow Jones Global Market Index (cap-weighted)
- Value Line Geometric U.S. Index (equal-weighted)
- Global Dow Index (equal-weighted)
- MSCI ACWI ETF (cap-weighted)
Dow Jones Global Market Index
(market cap weighted index)
For the week the Dow Jones Global Index had a gain of +0.62%. Price closed above the 52 week moving average (green line) and above support @ 824.48.
Value Line Geometric Index and Global Dow Index
(equal weighted indexes)
The Value Line Geometric Index ($XVG) is the median price performance of 1700 U.S. companies equal weighted (as opposed to most indexes which are market cap weighted) into an index. The Global Dow index ($GDOW) is a measure of the top 150 international companies equal weighted within the index.
These indexes are important as they equal-weight the price performance of all the companies held within the respective index. This removes the distortions associated with a small group of highly valued companies (which may be performing well) masking the performance of struggling companies and represents a good overview of overall internal equity breadth/strength.
These indexes are important as they equal-weight the price performance of all the companies held within the respective index. This removes the distortions associated with a small group of highly valued companies (which may be performing well) masking the performance of struggling companies and represents a good overview of overall internal equity breadth/strength.
Value Line Geometric Index ($XVG) Weekly
The equal-weight Value Line Geometric Index closed with a weekly gain of +0.59%. Price closed above the 52 week moving average (green line) and above support @ 641-647.
Global Dow Index ($GDOW) Weekly
The equal-weight Global Dow Index closed with a weekly gain of +0.64%. Price closed above the 52 week moving average (green line) and above support @ 6689.
iShares MSCI ACWI ETF
(market cap weighted ETF)
The iShares MSCI ACWI (All Country World Index) ETF is used as a benchmark to compare the performance of the various broad-based equity funds available in the Emirates Group Provident Scheme (EGPS) A/B/C accounts. It serves as a benchmark to determine how equity markets are performing on a worldwide basis. This assists in determining 2 parameters; whether to be invested in equities and also which funds within the EGPS offer the best performance relative to the benchmark.
The ETF is composed of the following regional components/weightings:
The ETF is composed of the following regional components/weightings:
ACWI Monthly Chart
Global equity markets bottomed in Oct 2022 and reached new all-time highs in August 2026.
For the month of October ACWI has gained +1.34%. It closed the month of September above the 12 month simple moving average (blue moving average on the chart above) keeping the long term trend BULLISH until month end.
For the month of October ACWI has gained +1.34%. It closed the month of September above the 12 month simple moving average (blue moving average on the chart above) keeping the long term trend BULLISH until month end.
ACWI Weekly Chart
This past week ACWI has a gain of +0.51%. Price closed above the 40 week simple moving average (shown in GREEN) and above the previous trading range.
World Equity Market Regional Relative Rotation Graphs
Below is a graph of 24 major regional equity market ETF's + ACWI (our world equity benchmark) shown on a Relative Rotation chart measured weekly with a 10 week look-back period (which forms the "tail" of the ETF). This graph allows us to observe over time how various regional ETF's are moving relative to both each other and also relative to cash.
- Leading (Green): (Momentum Positive + Price Relative Strength Positive)
- Weakening (Yellow): (Momentum Negative + Price Relative Strength Positive)
- Lagging (Red): (Momentum Negative + Price Relative Strength Negative)
- Improving (Blue): (Momentum Positive + Price Relative Strength Negative)
Given the cyclical nature of momentum and price within equity markets, in general the RRG charts will cycle in a clockwise manner (though not necessarily will each pass through all 4 quadrants as it is possible to rotate through an adjacent quadrant only).
Weekly Regional (Country) Relative Rotation Graphs (long term)
The RRG trend analysis status is currently NEUTRAL for world equities:
- ACWI Weekly Quadrant: WEAKENING Quadrant
- 24 Country Net Score: NEGATIVE
- ACWI price Relative Strength (horizontal axis): POSITIVE
- ACWI price Momentum (vertical axis): NEGATIVE
Coincident Equity Market Indicators
Crude Oil
Crude oil was higher over the past week and closed above its pre-war trading range. The 3-month correlation between crude oil and global equities is neutral.
Gold
Gold was higher over the past week and closed below its previous trading range (resistance @ $4488.72). The 3-month correlation between gold and global equities is positive.
Commodities
Commodities were higher over the past week and closed above their previous trading range. The 3-month correlation between commodities and global equities is positive.
U.S. 30 Year Treasury Bond
U.S. 30 year bond prices were higher over the past week and closed below their most recent trading range. The 3-month correlation between US government bonds and global equities is neutral.
Current 5-Factor Model Indications
The combined 5-Factor quantitative model is currently YELLOW (neutral). The 5-Factor model currently has the following sub-model readings:
Economic Model
The Economic model is currently GREEN. The 1-year rate-of-change in global economic data had moved towards contraction but has stabilized over the past several months. The model is composed of numerous inputs including data from the following sources:
Forward Forecast Data:
Forward Forecast Data:
- OECD Composite Leading Indicators (CLI)
- J.P. Morgan Global Purchasing Managers (PMI) Index
- World Bank Monthly Global Economic Report
OECD Composite Leading Indicators
(data as of 07 October 2026)
(data as of 07 October 2026)
The OECD Composite Leading Indicator (CLI) is designed to predict business cycle changes 6-9 months in advance. It provides early signals of turning points in business cycles showing fluctuation of the economic activity around its long term potential level.
A CLI reading above (below) 100 is always an indication that anticipates levels of GDP above (below) long-term trend.
A CLI reading above (below) 100 is always an indication that anticipates levels of GDP above (below) long-term trend.
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J.P. Morgan Purchasing Managers Index (PMI)
(data as of 05 October 2026)
(data as of 05 October 2026)
The J.P. Morgan monthly PMI Report is based on the results of manufacturing and service sector surveys covering over 18,000 purchasing executives in over 40 countries. Together these countries account for an estimated 89% of global gross domestic product (GDP).
Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease. As such, using the PMI data gives us a real-time look at global growth.
Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease. As such, using the PMI data gives us a real-time look at global growth.
- readings > 50 indicate economic expansion
- readings < 50 indicate economic contraction.
Global Composite Output Index
- The Global Composite Output Index rose 0.8 to 54.3 (53.5the previous month) and remains in strong expansion.
- It has now moved above its long term average Global PMI measure of 53.2.
World Bank Global Monthly Outlook
(September 2026)
(September 2026)
U.S. Economic Growth & Inflation
Year-over-Year GDP growth
The Gross Domestic Product (GDP) in the United States expanded 2.20 percent in the second quarter of 2026 over the same quarter of the previous year. GDP Annual Growth Rate in the United States averaged 3.15 percent from 1948 until 2026, reaching an all time high of 13.40 percent in the fourth quarter of 1950 and a record low of -7.40 percent in the second quarter of 2020.
Quarter-over-Quarter GDP growth
The US economy expanded at an annualized rate of 2.2% in Q2 2026, revised up by 0.7 percentage point from the 2nd estimate, following an upwardly revised 2.5% growth in Q1. The stronger estimate reflected upward revisions to investment, consumer spending, and government spending. The upward revision to investment reflected stronger private inventory and fixed investment, with nonresidential structures (particularly commercial and healthcare construction, led by data centers) providing the largest contribution. From an industry perspective, the growth was driven by increases in real value added across private services-producing industries (2.5%), private goods-producing industries (2.3%), and government (less than 0.1%). The largest contributions came from real estate and rental and leasing, information, durable goods manufacturing, and finance and insurance. These gains were partly offset by declines in transportation and warehousing, retail trade, and nondurable goods manufacturing.
Annualized Inflation
The annual inflation rate in the US steadied at 3.4% in August 2026, the same as in July and in line with forecasts. Gasoline prices rose 27.4% yoy, slightly more than 24.6% in July and fuel oil prices increased 52%, compared with 39.1% previously. On the other hand, inflation eased for shelter, to 3% from 3.2%, and for food to 2.7% from 3%. On a monthly basis, the CPI rose 0.4%, the most in three months, also matching forecasts. Gasoline rose 3.9% in August, accounting for over one third of the monthly increase while natural gas (-1.1%) and electricity (-0.2%) fell. Food edged up 0.1% while shelter rose 0.3%. Other increases were also seen for communication (2.3%), airline fares (2.7%), education (0.8%) and used cars and trucks (0.4%). Meanwhile, core CPI rose 0.3% on the month, above 0.2% in July and forecasts of 0.2%. The annual rate however, slowed to 2.4%, the lowest reading since March 2021, from 2.5%, in line with expectations.
Eurozone Economic Growth & Inflation
Year-over-Year GDP growth
The Euro Area economy expanded 1.2% year-on-year in Q2 2026, up from 1% in the previous estimate and twice the 0.6% growth recorded in Q1 2026. The acceleration was driven by stronger growth in household expenditure (1.2% vs. 1.0%) and gross fixed capital formation (1.4% vs. 0.3%), while exports also rebounded sharply (3.9% vs. -0.1%). Imports increased at a faster pace as well, rising 3.6% compared with 1.9% previously. Meanwhile, growth in government spending slowed to 1.9% from 2.3%. Among the bloc's largest economies, GDP growth accelerated in Germany (1.0% vs. 0.7%) and Italy (1.0% vs. 0.8%), while it slowed in France (0.5% vs. 0.7%) and remained unchanged in Spain (2.7% vs. 2.7%).
Quarter-over-Quarter GDP growth
The Eurozone economy expanded 0.6% in Q2 2026, revised up from initial estimates of 0.4%, according to final Eurostat data. It marked the strongest quarterly growth since Q2 2022, driven largely by a sharp upward revision to Ireland’s GDP, which surged 10.2% after plunging 7.8% in Q1. Germany’s growth was also revised higher to 0.3% from 0.2%, while France’s was lowered to 0.0% from 0.2%. Spain once again led the bloc’s larger economies, with flash data showing 0.7% growth, while Italy’s expansion was confirmed at 0.2%. Net trade made the largest contribution to growth, adding 0.9 percentage points as exports jumped 3.4%, outpacing a 1.5% rise in imports. Household consumption contributed 0.2 points, with spending rising 0.4% after a 0.1% increase in Q1. Fixed investment and government spending had negligible contributions, while changes in inventories subtracted 0.5 points. On an annual basis, Eurozone GDP growth accelerated to 1.2%, exceeding the second estimate of 1.0%.
Annualized Inflation
Eurozone annual inflation accelerated to 3.8% in September 2026, up from 3.2% in August and above market expectations of 3.6%, according to preliminary estimates. The rate reached its highest level since September 2023 and remained well above the ECB’s 2% target, driven largely by a surge in energy prices amid continued fighting in the Middle East. Energy inflation jumped to 18.8%, its highest level since January 2023. Price growth also accelerated for services, to 3.2% from 3.0%, and unprocessed food, to 4.0% from 2.7%. Core inflation, which excludes energy and food, rose to 2.5% from 2.4%, in line with expectations. Among the euro area’s largest economies, inflation accelerated in Germany to 3.3% from 2.9%, France to 3.4% from 2.6%, Spain to 5.0% from 4.6%, Italy to 4.1% from 3.2%, and the Netherlands to 3.0% from 2.8%.
Japan Economic Growth & Inflation
Year-over-Year Annual GDP growth
Japan’s economy expanded at an annualized rate of 1.4% in Q2 2026, revised up from the preliminary reading and market estimates of 1.1%. It marked the third consecutive quarter of growth, supported by stronger government spending and a positive contribution from net trade, as exports increased while imports declined. Simultaneously, private consumption, which accounts for more than half of the economy, remained subdued amid persistent price pressures, exacerbated by higher energy costs linked to the Middle East conflict, and continued to weigh on household spending. Capital expenditure also remained weak, contributing negatively for the second consecutive quarter.
Quarter-over-Quarter GDP growth
Japan’s GDP grew 0.4% quarter-on-quarter in Q2 2026, slightly higher than flash data of 0.3% and in line with market forecasts. It was the third straight quarter of expansion, amid an upward revision in government spending (1.7% vs 1.6% in the preliminary reading, after a 0.4% rise in Q1). At the same time, business investment fell less than anticipated (-0.9% vs -1.2% in flash figures, after a 1.0% decline in Q1), suggesting relatively resilient corporate spending. Meanwhile, external demand contributed positively (0.5 ppts), as exports rose (0.4% vs 1.7% in Q1) while imports fell (-1.7% vs 0.3%). Private consumption, which accounts for more than half of the economy, was flat, matching the earlier estimate and reversing from 0.4% growth in Q1, as elevated cost pressures weighed on household spending.
Annualized Inflation
Japan's annual inflation rate held at 1.9% in August 2026, unchanged from the previous month and remaining at its highest level since December 2025. Prices continued to rise across food (3.1% vs 3.5% in July), transport (2.3% vs 2.6%), housing (1.0% vs 1.0%), household goods (4.9% vs 3.7%), clothing (1.5% vs 1.2%), healthcare (3.0% vs 2.1%), recreation (2.2% vs 1.9%), and miscellaneous items (0.7% vs 0.4%). Meanwhile, gas prices accelerated (2.0% vs 1.8%), while electricity prices fell at a steeper pace (-2.4% vs -0.1%) amid government energy subsidies. At the same time, education remained in deflation since early 2024 (-3.8% vs -3.8%). Core inflation, which excludes fresh food, eased to 1.7% from 1.8% in July, marking the first slowdown in four months while staying below the Bank of Japan's 2% target for a seventh consecutive month. On a monthly basis, consumer prices edged up 0.1%, much slower than an upwardly revised 0.5% increase in July.
China Economic Growth & Inflation
Year-over-Year GDP growth
China's economy expanded 4.3% year-on-year in Q2 2026, slowing from 5.0% in Q1 and missing market expectations of 4.5%. It marked the weakest annual growth since Q4 2022, as soft domestic demand, subdued private investment, and the prolonged property downturn outweighed continued support from resilient AI-related exports. The latest reading also fell below the lower end of Beijing's 4.5%–5.0% annual growth target, underscoring the uneven recovery and reinforcing expectations of further policy support. The National Bureau of Statistics (NBS) said in a statement that external uncertainties remained elevated, while the economy continued to face an imbalance between robust supply and weak demand. For the first half of 2026, GDP grew 4.7%. Deputy NBS head Mao Shengyong noted that the economy remained "within an appropriate range" and demonstrated "strong resilience," supported by high-tech and equipment manufacturing, while the services sector continued to post solid growth.
Quarter-over-Quarter GDP growth
China’s economy grew 0.9% qoq in Q2 2026, matching market expectations but easing from a 1.3% gain in Q1. It was the weakest quarterly growth since Q2 2024, as soft domestic demand and the oil shock linked to the Iran war offset resilient exports. The latest figures highlighted an increasingly uneven recovery, with manufacturing remaining a key growth driver while household consumption and private investment stayed subdued amid the prolonged property downturn and the lingering effects of higher energy costs. The data came ahead of the closely watched late-July Politburo meeting, reinforcing expectations for additional policy support for the rest of the year. Economists expect Beijing to lean more on fiscal stimulus to support growth, as the central bank has limited scope for aggressive monetary easing despite easing oil prices. Premier Li Qiang has called for "a comprehensive and objective understanding" of the economic situation and urged stronger counter-cyclical policy adjustments.
Annualized Inflation
China’s annual inflation climbed to 0.8% in August 2026 from July’s six-month low of 0.5%, in line with market estimates. Non-food prices rose at a steeper rate (1.2% vs 0.9% in July), led by a sharp increase in transport costs (2.5% vs 0.4%) amid higher fuel prices and stronger travel-related demand. Upward price pressure also came from clothing (1.3% vs 1.4%), healthcare (2.7% vs 2.9%), and education (1.4% vs 1.3%). In contrast, housing costs remained subdued (-0.3% vs -0.3%). On the food side, prices declined for the fifth straight month (-1.4% vs -1.5%), weighed by a further drop in pork prices amid abundant supply and weak consumption. Core inflation, excluding food and energy, rose 1.0% yoy, up from July's six-month low of 0.9% On a monthly basis, consumer prices increased 0.4%, topping forecasts of a 0.3% gain and reversing a 0.1% drop in July. It also marked the highest monthly reading since February.
Valuation Model
The Valuation model is currently YELLOW. Equity valuations are currently near their "fair value" relative to underlying current global economic fundamentals.
Technical Model
The Technical model is currently YELLOW. Global equity markets have been in a trading range since the start of the Middle East war.
Sentiment Model
The Sentiment model is currently YELLOW. Overall sentiment has turned neutral (sentiment acts as an inverse shorter-term trading indicator).
Liquidity/Economic Stress Model
The Liquidity/Economic Stress model is currently GREEN.
World Bond Asset Class Return Monitor
We use the following U.S. exchange traded funds to monitor bond performance for the various bond asset classes:
Total Market Bond Basket:
- U.S. Total Bond Market (BND): (Red)
- International (ex-U.S.) Total Bond Market (BNDX): (Blue)
- U.S. Gov't Treasury Bonds (GOVT): (Orange)
- Foreign Developed Market Gov't Treasury Bonds (BWX): (Pink)
- U.S. Corporate Bonds (LQD): (Maroon)
- International Corporate Bonds (PICB): (Black)
- U.S. High Yield Bonds (JNK): (Purple)
- International High Yield Bonds (IHY): (Green)
- U.S. Gov't Inflation Protected Bonds (TIP): (Lime Green)
- International Gov't Inflation-Protected Bonds (WIP): (Cyan)
1 Year Rolling Bond Performance
- Over the past 12 months rolling period the top performing bond asset class has been Int'l Gov't Inflation-Protected Bonds with Int'l Gov't Treasury Bonds the worst performing.
- The U.S. Total Bond Market (RED) and the International (ex-U.S.) Total Bond Market (BLUE) have delivered negative returns over the past year.
3 Month Rolling Bond Performance
- Over the past 3 month rolling period the top performing bond asset class has been Int'l Gov't Inflation-Protected Bonds with US Corporate Bonds lagging.
- U.S. Total Bond Market (RED) and International (ex-U.S.) Total Bond Market (BLUE) have delivered lower returns over the past quarter (3 months).
1 Month Rolling Bond Performance
- Over the past 1 month rolling period the top performing bond asset class has been US Gov't Treasury Bonds with Int'l Corporate Bonds lagging.
- The U.S. Total Bond Market (RED) and the International (ex-U.S.) Total Bond Market (BLUE) have delivered lower returns over the past month.
Past Week Bond Asset Class Performance
- Over the past week Int'l Gov't Inflation Protected Bonds were the top performing bond class.
- The U.S. Total Bond Market (RED) and the International (ex-U.S.) Total Bond Market (BLUE) posted higher returns over the past week.
Commentary:
It has been shown in repeated studies over many years a balanced portfolio consisting of both equities and bonds (with percentage holdings in each adjusted according to personal risk tolerances) remains the best methodology in managing a long term retirement portfolio (due to the independent/low correlated function each takes when navigating though various market cycles and economic conditions).
It is best to think of bonds and equities as 2 independent brains each looking at the market from a different perspective:
As such, historically both serve a useful purpose in a balanced portfolio.
It is best to think of bonds and equities as 2 independent brains each looking at the market from a different perspective:
- Equities: Corporate profits focused.
- Bonds: Economic growth and Inflation focused.
As such, historically both serve a useful purpose in a balanced portfolio.
ETF Bond Proxy
Global aggregate bonds posted a gain of +0.33% over the past week. They had remained rangebound since mid-2025 but closed below their trading range in late September. They closed the week below resistance and below the 52 week moving average.
It is important to note since late 2021 global bonds have acted as a poor portfolio diversifier as they have largely been correlated with global equities. We are monitoring closely for the first indication of a decoupling.
It is important to note since late 2021 global bonds have acted as a poor portfolio diversifier as they have largely been correlated with global equities. We are monitoring closely for the first indication of a decoupling.
U.S. 10 year Treasury Yield
The most recent global bear market in bonds began in mid-2020 when the US Federal Reserve pushed interest rates to 0% to combat deflation. Below is charts for the various US Treasury yields from their peak (bond prices move inverse to yields so falling treasury yields are bullish for bond prices).
U.S. treasury yields had been in a symmetrical pattern of lower highs/higher lows from early 2023 to mid-2026 before their recent breakout. This past week yields closed above support @ 4.924% and above the 52 week moving average.
German 10 year Bund Yield
German 10 year treasury yields bottomed in early 2020 during the depths of the European Covid shutdowns. They rebounded in a parabolic manner into Oct, 2023 before settling into a trading range from late-2023 to early-2026..
This past week yields closed above the 52 week moving average and above support @ 3.181%.
This past week yields closed above the 52 week moving average and above support @ 3.181%.
UK 10 year Gilt Yield
The UK 10 year treasury yield had remained rangebound from mid-2022 to Mar-2026 before its recent breakout. This past week yields closed above the 52 week moving average and above support @ 5.179%.
Japanese 10 year Treasury Yield
Japan had been fighting deflation for decades but recent unprecedented monetary policy by the BOJ appears to be having effect upon inflation (and rising yields).
After bottoming at near -0.28% in mid-2016, yields rose and were able to finally break above 0.15% in early 2022.
The BOJ ended yield curve control (YCC) at the end of March, 2024 and since this period rates have been set by market demand . This past week yields closed above support @ 2.785% and above the 52 week moving average.
After bottoming at near -0.28% in mid-2016, yields rose and were able to finally break above 0.15% in early 2022.
The BOJ ended yield curve control (YCC) at the end of March, 2024 and since this period rates have been set by market demand . This past week yields closed above support @ 2.785% and above the 52 week moving average.
Currencies
Below is the 12/3/1 month and weekly rolling returns for the 6 currencies that make up the U.S. Dollar index. The U.S. Dollar index is composed of a weighted geometric mean of the dollar's value relative to the 6 currencies in the following list:
In addition, we also include the following for comparison purposes:
- Euro (EUR), 57.6% weight.
- Japanese yen (JPY) 13.6% weight.
- U.K. Pound sterling (GBP), 11.9% weight.
- Canadian dollar (CAD), 9.1% weight.
- Swedish krona (SEK), 4.2% weight.
- Swiss franc (CHF) 3.6% weight.
In addition, we also include the following for comparison purposes:
- The Australian Dollar (not a part of the USD Index) as it is a popular commodity currency.
- Gold (priced in USD) as it typically acts more like a currency void of fiat printing.
1 Year Rolling Currency Performance
- Over the past 12 months rolling period the top performing major currency has been the Australian Dollar with the Swedish Krona the worst performing.
3 Month Rolling Currency Performance
- Over the past 3 month rolling period the top performing currency has been the Japanse Yen with the Swedish Krona lagging.
1 Month Rolling Currency Performance
- Over the past 1 month rolling period the top performing currency has been the US Dollar Index with Gold lagging.
Past Week (7-day) Currency Performance
- Over the past week the top performing major currency was the Swedish Krona with Gold lagging.
U.S. Dollar: (Bullish Bias)
Commentary:
The US Dollar Index was up +0.30% over the past week. Over the past year it has remained rangebound after falling substantially from its Jan/2025 peak.
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 99.58 / 103.61
Monthly: 99.97 / 102.29
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 99.58 / 103.61
Monthly: 99.97 / 102.29
US Dollar Index Daily charts
The 2 year daily chart (above) shows the trading range the USD has been confined to since Apr 2025. The 101.80-101.98 zone remains an important resistance with daily support @ 100.16.
Over the past week the USD closed above its short term trend 50 and 200 day moving averages.
(Short Term Bullish)
(Short Term Bullish)
US Dollar Index Weekly charts
The weekly chart shows the recent trading range in 2025. Price closed the week above the intermediate term trend 20 and 65 week moving averages.
(Intermediate Term Bullish)
(Intermediate Term Bullish)
A longer term 20 year look-back at the USD shows the 79.05-104.32 price (yellow) area has been a very significant bull/bear battle zone since 1987.
US Dollar Index Monthly chart
For the month of October the U.S. Dollar index has gained +0.72%. Price remains confined to the rising price channel from the 2011 lows and remains below strong monthly resistance @ 98.66-100.21.
Price closed September above the long term trend 10 month moving average keeping the long term bias bullish until months end.
(Long Term Bullish)
Price closed September above the long term trend 10 month moving average keeping the long term bias bullish until months end.
(Long Term Bullish)
Euro (Bearish Bias)
The Euro lost -0.46% over the past week. It has remained largely range bound between 105-112 over the past year before its most recent breakout.
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 111.56 / 113.72
Monthly: 111.32 / 114.19
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 111.56 / 113.72
Monthly: 111.32 / 114.19
Euro Daily Charts
The Euro topped out in late 2020 @ 123.28 and had been on a steady decline until September 2022. It rose dramatically into the end of 2022 and had remained range bound in 2023-24 before its recent breakout.
On the 2nd daily chart price it can be seen how important the yellow band daily resistance zone @ 114.61-116.04 is going back to 2015 (which should now act as resistance).
The Euro closed the week below the short term trend 50 and 200 day moving averages.
(Short Term Bearish)
On the 2nd daily chart price it can be seen how important the yellow band daily resistance zone @ 114.61-116.04 is going back to 2015 (which should now act as resistance).
The Euro closed the week below the short term trend 50 and 200 day moving averages.
(Short Term Bearish)
Euro Weekly Chart
The Euro peaked in 2008 and achieved a bottom in 2022. It has been on a steady decline but recently broke above important resistance @ 104.51-104.96 (which now should act as support).
This past week the Euro closed the week below the intermediate trend 20 week + 65 week moving averages.
(Intermediate Term Bearish)
This past week the Euro closed the week below the intermediate trend 20 week + 65 week moving averages.
(Intermediate Term Bearish)
Euro Monthly
For the month of October the Euro has lost -1.14%. On a monthly closing basis it closed the month of September below the long term trend 10 month moving average keeping the long term outlook bearish until months end.
(Long Term Bearish)
(Long Term Bearish)
UK Pound (Bearish Bias)
U.K. Pound Daily Chart
U.K. Pound Weekly Charts
U.K. Pound Monthly Charts
The British Pound lost -0.05% over the past week. It continues to recover from lows last seen 37 years ago. Historically since 1987 the Pound has traded within a range of 1.40 to 2.00 with brief excursions above/below this range. The previous all-time low over the past 200 years was 1.0520 (daily low @ 1.0438) seen in the 1st quarter of 1985 which was revisited in September 2022 (close 1.0696 27 Sep 2022).
This past week the Pound closed the week below its short term trend daily 50 +200 day moving averages and below the intermediate term trend 20 + 65 week moving averages. For the month of October it has lost -0.28% and closed the month of September below its long term 10 month moving average (which technically switches the long term bearish until months end).
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 130.98 / 137.20
Monthly: 132.64 / 137.30
This past week the Pound closed the week below its short term trend daily 50 +200 day moving averages and below the intermediate term trend 20 + 65 week moving averages. For the month of October it has lost -0.28% and closed the month of September below its long term 10 month moving average (which technically switches the long term bearish until months end).
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 130.98 / 137.20
Monthly: 132.64 / 137.30
Australian Dollar (Neutral Bias)
Australian Dollar Daily Chart
Australian Dollar Weekly Charts
Australian Dollar Monthly Chart
The Australian Dollar gained +0.43% over the past week. It bottomed in Apr/2025 and has been on a steady uptrend to present.
For the month of October the Aussie dollar has gained +0.50%. It closed the week below the short term trend 50 + 200 day moving averages and between the intermediate term trend 20 + 65 week moving averages. It closed the month of September below the long term trend 10 month moving average switching the long term outlook bearish until months end.
(Short Term Bearish)
(Intermediate Term Neutral)
(Long Term Bearish)
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 68.75 / 72.33
Monthly: 63.58 / 72.32
For the month of October the Aussie dollar has gained +0.50%. It closed the week below the short term trend 50 + 200 day moving averages and between the intermediate term trend 20 + 65 week moving averages. It closed the month of September below the long term trend 10 month moving average switching the long term outlook bearish until months end.
(Short Term Bearish)
(Intermediate Term Neutral)
(Long Term Bearish)
Support / Resistance Levels (based upon respective time period closing price):
Weekly: 68.75 / 72.33
Monthly: 63.58 / 72.32
Canadian Dollar (Bearish Bias)
Canadian Dollar Daily Chart
Canadian Dollar Weekly Chart
Canadian Dollar Monthly Chart
The Canadian Dollar lost -0.03% over the past week. Until recently it has been one of the weakest major global currencies but has recovered from 9 year lows in 2025.
The Loonie closed the week below the short term trend 50 + 200 day moving averages and below the intermediate term trend 20 + 65 week moving averages. For the month of October the Loonie has lost -0.18%. It closed the month of September below the long term trend 10 month moving average keeping the long term bearish until months end.
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon respective time period closing price)
Weekly: 69.61 / 70.46
Monthly: 68.84 / 71.09
The Loonie closed the week below the short term trend 50 + 200 day moving averages and below the intermediate term trend 20 + 65 week moving averages. For the month of October the Loonie has lost -0.18%. It closed the month of September below the long term trend 10 month moving average keeping the long term bearish until months end.
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon respective time period closing price)
Weekly: 69.61 / 70.46
Monthly: 68.84 / 71.09
Important Charts to Watch
Commodity Basket Index
Commodities (as measured by the Reuters/Jefferies CRB index; a basket of 19 commodities) are an important monitor of global inflationary pressures.
They have experienced a multi-year breakout on the back of the US/Israel/Iran war as the ongoing Strait of Hormuz hostilities continue. At their recent peak they have increased > 35% from their pre-war levels.
They have experienced a multi-year breakout on the back of the US/Israel/Iran war as the ongoing Strait of Hormuz hostilities continue. At their recent peak they have increased > 35% from their pre-war levels.
Equity Market Volatility
The Volatility Index (VIX) is a measure of expected price fluctuations of options on the S&P 500 index options over the next 30 days (technically the VIX is quoted in percentage points and represents the expected range of movement in the S&P 500 index over the next year, at a 68% confidence level i.e. one standard deviation of the normal probability curve). For example, if the VIX is 15, this represents an expected annualized change, with a 68% probability, of less than 15% up or down.
In general it can be said there are four VIX volatility regimes:
The VXV uses the same calculation as the VIX but looks forward 3 months. When the VIX is greater than the VXV ($VIX:$VXV ratio > 1.0) the volatility structure is termed to be in "contango". It indicates traders are much more concerned about short term volatility than they are about longer term volatility and when that ratio returns to "normal" (< 0.93) it is typically a good sign market stress is easing (and a good time to add to equity positions).
As of this weeks market close volatility closed below the "VIX Event End Line" area with the VIX below 20. The volatility structure is currently BULLISH for equities.
In general it can be said there are four VIX volatility regimes:
- < 20 is trending bullish for equities
- ≈ 20-25 is choppy bullish for equities
- ≈ 25-30 is choppy bearish for equities
- > 30 is trending bearish for equities
The VXV uses the same calculation as the VIX but looks forward 3 months. When the VIX is greater than the VXV ($VIX:$VXV ratio > 1.0) the volatility structure is termed to be in "contango". It indicates traders are much more concerned about short term volatility than they are about longer term volatility and when that ratio returns to "normal" (< 0.93) it is typically a good sign market stress is easing (and a good time to add to equity positions).
As of this weeks market close volatility closed below the "VIX Event End Line" area with the VIX below 20. The volatility structure is currently BULLISH for equities.
Global Banks
An important measure of economic stability is the performance of bank stocks. Below is a chart of the KBE (US Bank ETF) and KRE (US Regional Bank ETF). US banks peaked in Aug 2026 and have been on a sustained decline to present.
Similarly, European financial stocks (represented below using the iShares MSCI European Financials ETF) peaked this summer and have been on a steady decline to present.
Chinese Equities
The Shanghai Composite index lost -1.92% over the past week and remains above important support @ 3696-3704. It has remained rangebound since 2015 before the most recent breakout.
Chinese growth remains key to both Emerging market performance as well as an indication of Developed markets demand. From its peak in mid-2015, the Shanghai index lost more than -50% to its recent lows. Significant strength returning to China further indicates that world economic growth has positively turned the corner.
Chinese growth remains key to both Emerging market performance as well as an indication of Developed markets demand. From its peak in mid-2015, the Shanghai index lost more than -50% to its recent lows. Significant strength returning to China further indicates that world economic growth has positively turned the corner.
PRECIOUS METALS
Precious metals (and their respective producers) are an area we recommend all investors consider having a small position within. Precious metals perform well during times when real (inflation adjusted) interest rates are falling and/or when the USD is weak. The following charts can be utilized to determine when the risk/reward is favorable.
Below is a ratio price chart of gold stocks (HUI; the "Gold Bugs" Index) to gold bullion going back to 1996 when the Gold Bugs Index first came into existence. As can be seen, whenever the HUI:GOLD ratio dips to below approximately 0.14 (the GREEN zone on the chart) has been a low-risk opportunity to acquire gold stocks.
Gold stocks have recently broken out of their "low-risk vs. high-reward" range and are approaching the crucial 0.20 range which has capped gold stocks since 2014. Historically purchases of gold equities when within the green-zone have been a very good long term buy-and-hold opportunities.
Gold stocks have recently broken out of their "low-risk vs. high-reward" range and are approaching the crucial 0.20 range which has capped gold stocks since 2014. Historically purchases of gold equities when within the green-zone have been a very good long term buy-and-hold opportunities.
Silver (chart below) broke out of the price ratio relative to the price of gold (GREEN zone on the chart) which has historically been a low risk entry point over the past 40 years.
Silver recently reached its sell zone on a relative basis to gold (RED box on the 2nd chart panel).
To put the valuation into a longer term perspective, below is a chart of the Gold/Silver ratio (the opposite ratio to Silver/Gold) going back to 1687. Clearly it can be seen a gold:silver ratio > 80 has historically been an outlier over the past 100+ years (and greater than 100 is historic):
The current Gold:Silver ratio has now broken below the 65 area which has been the limit to silver advances over the past 10 years. The silver target sell area is the 45 ratio which has historically been a very reliable sell zone (reached in late 2025).
EVEN MORE BULLISH is the price of Platinum (chart below) which has exceeded the "buy zone" last seen in 1982! Platinum is 15-20 times rarer than gold and has rarely in history traded at a price below the price of gold (only 9.7% of the time going back to 1971). It remains the cheapest it has been GOING BACK TO AUGUST 1971 WHEN THE U.S. LEFT THE GOLD STANDARD on a relative basis:
- The current Platinum:Gold ratio remains below 0.85 (red line on the chart below).
- A Platinum/Gold ratio < 0.85 has only occurred 4.7% of the time back to 1971.
- Prior to recent lows, the lowest Platinum:Gold ratio since August 1971 (when the USD was removed from the gold standard) was hit on 20 Sept 1982 when it hit a ratio low of 0.689 (Platinum $300.40/Gold $436.00).
- If Platinum were to return to its most common ratio relative to Gold (1.0x-1.25x which has been common 35% of the time) it would imply a price rise of approximately 50-90% from recent levels.
Platinum has now broken out and is rapidly trying to regain its historic price level greater than the price of gold.
The following charts and commentary (in italics; bold print is our emphasis) are sourced from Kitco from commentary sourced in Feb 2017 when the ratio was near 0.85 (Platinum has become even cheaper on a relative basis since the data was published):
Platinum to gold ratios show wide variance over the 46 year period ranging from highs above 2.5 before and soon after Nixon began taking the United States off the gold standard to periodic lows below 1.0:
Platinum to gold ratios show wide variance over the 46 year period ranging from highs above 2.5 before and soon after Nixon began taking the United States off the gold standard to periodic lows below 1.0:
Our data set covers 553 months beginning in January 1971. The distribution of ratios in both tabular and chart format follows:
Platinum/Gold Ratio: % of Months
Platinum/Gold Ratio: % of Months
- < 0.85: 4.7%
- .85-1.01: 5.0%
- 1.0-1.25: 34.7%
- 1.25-1.5: 19.3%
- 1.5-2.0: 15.4%
- 2.0-2.5: 8.9%
- > 2.5: 2.0%
From our data set and the distributions of monthly average platinum-gold ratios from January 1971 thru January 2017, I glean the following:
From a compendium of sources, the average crustal abundance of both metals is around 4 ppb. Based solely on this fact, platinum and gold should trade at about the same price.
And indeed, our compilation shows that for nearly 50% of the time since gold was decoupled from the world’s reserve currency and allowed to trade freely on exchanges, the price ratio has ranged from 0.85 to 1.25. That said, since January 1971, the average price of platinum has been $637/oz and gold has been $518/oz for an overall ratio of 1.23:1. Clearly there are other factors other than the nearly equal crustal abundances that account for this historic price relationship.
A variety of supply and demand factors cause platinum to trade at a premium to gold:
Fluctuations in the relative prices of platinum and gold are largely driven by:
Platinum functions both as a precious and industrial metal. It is usually tied to the price of gold in both short- and long-term trading patterns. In times of financial distress and economic turmoil, platinum tends to behave more like gold with widespread hoarding.
The platinum-gold ratio can be used to ascertain whether one metal is over- or undervalued with respect to the other. The current monthly average ratio below 0.85 is unusual and indicates that platinum is severely undervalued with respect to gold *
* The ratio recently hit 0.55 and remains near a record low.
- A ratio of less than 0.75 is a single outlier that occurred once during the second half of 1982 when overall ratios averaged 0.81.
- Ratios <0.85 are quite unusual at 4.7%. They occurred for two months in the first quarter of 1975, the aforementioned six months in 1982, in June-July of 1985, and for an ongoing run of 16 months that commenced in October 2015.
- Ratios from 0.85 to 1.0 constitute 15.0% of the record.
- Pt:Au from 1.0 to 1.25 is the most common range and comprises 34.7% of ratios since 1971.
- The ratios between 1.25 and 1.5 occur 19.3% of the time.
- Ratios from 1.5 to 2.0 make up 15.4% of the record.
- The 2.0-2.5 interval covers 8.9% of the months in our compendium.
- The 11 monthly outliers at >2.5 comprise 2.0% of the total record and have not occurred since 1971.
From a compendium of sources, the average crustal abundance of both metals is around 4 ppb. Based solely on this fact, platinum and gold should trade at about the same price.
And indeed, our compilation shows that for nearly 50% of the time since gold was decoupled from the world’s reserve currency and allowed to trade freely on exchanges, the price ratio has ranged from 0.85 to 1.25. That said, since January 1971, the average price of platinum has been $637/oz and gold has been $518/oz for an overall ratio of 1.23:1. Clearly there are other factors other than the nearly equal crustal abundances that account for this historic price relationship.
A variety of supply and demand factors cause platinum to trade at a premium to gold:
- Platinum is a much smaller market. Cumulative world production of platinum is estimated to be about 5% of gold (9400 tonnes versus 182,000 tonnes). From 1994-2014, 3700 tonnes of platinum were mined versus 52,600 tonnes of gold or about 7% (source: USGS).
- Platinum is largely an industrial metal. Catalytic converters, electronics, petroleum and chemical catalysts, medical technologies, and many minor uses constitute over 60% of its annual demand. Around 30% is used in jewelry and 10% for investment demand. Also, 30% of the annual platinum supply now comes from recycling, mostly from catalytic converters. Some demand is consumed and lost to the marketplace.
- Gold is overwhelmingly a precious metal; 90% is used in jewelry and investments and only 10% in industrial applications. An estimated 98% of all the gold ever mined in the world remains available and held in jewelry, by central banks, in private hoards, and as fabricated products (source: USGS).
- About 70% of yearly platinum mine supply comes from South Africa, a geopolitically risky country. Much new platinum is a by-product of nickel-copper mining and smelting; therefore, annual platinum production is dependent on the supply-demand fundamentals and prices of these primary metals.
Fluctuations in the relative prices of platinum and gold are largely driven by:
- the overall growth and health of the world’s economy and in the case of platinum, the automotive industry;
- labor, power, currency, and political issues in South Africa that cause major perturbations in the platinum supply;
- safe haven hoarding of gold and to a much lesser extent, platinum, in times of economic uncertainty and major geopolitical events; speculators moving in and out of paper markets of both metals (bullion exchanges, ETFs, and derivatives) and to a lesser extent, central bank trading of physical gold.
Platinum functions both as a precious and industrial metal. It is usually tied to the price of gold in both short- and long-term trading patterns. In times of financial distress and economic turmoil, platinum tends to behave more like gold with widespread hoarding.
The platinum-gold ratio can be used to ascertain whether one metal is over- or undervalued with respect to the other. The current monthly average ratio below 0.85 is unusual and indicates that platinum is severely undervalued with respect to gold *
* The ratio recently hit 0.55 and remains near a record low.
U.S. Equity Market Valuation
Crestmont Price/Earnings Ratio
(Source: Crestmont Research)
(Source: Crestmont Research)
The Crestmont P/E ratio is a valuation metric used to assess the stock market's price-to-earnings ratio with a focus on long-term, inflation-adjusted earnings. It was developed by Crestmont Research and is designed to provide a more stable and consistent measure of market valuation compared to traditional P/E ratios.
What It Measures:
We illustrate the recent market overvaluation via 3 charts produced by Crestmont Research. In the following graphs note the following:
What It Measures:
- Price-to-Earnings Ratio: Like the standard P/E ratio, it compares the market's price (e.g., the level of a stock index like the S&P 500) to its earnings per share (EPS).
- Cyclically Adjusted Earnings: Instead of using a single year's earnings, the Crestmont P/E uses a 10-year average of inflation-adjusted earnings (similar to the CAPE ratio by Robert Shiller). This smooths out short-term fluctuations in earnings due to economic cycles.
- Inflation Adjustment: Earnings are adjusted for inflation to ensure consistency over time, accounting for changes in purchasing power.
- Long-Term Perspective: By focusing on a decade of earnings, it aims to reduce the impact of temporary economic booms or busts, providing a clearer view of whether the market is overvalued, undervalued, or fairly priced.
We illustrate the recent market overvaluation via 3 charts produced by Crestmont Research. In the following graphs note the following:
- the Crestmont Price/Earnings (P/E) ratio remains at the most expensive market valuation in U.S. stock market history (> 4 standard deviations above its geometric mean).
- when compared to inflation the current Crestmont P/E is well above the upper extreme portion of the bubble zone defining the 1998-2000 bubble peak as shown on the 2nd chart.
- pay particular attention to chart #2 where it can be seen high equity valuations are historically supported by inflation in the 0-3% range. Inflation remains outside this corridor so markets remain very vulnerable.
U.S. (NYSE) Margin Debt
(Source: Advisor Perspectives)
We continue to monitor with interest the current margin debt on US markets. For those who are unfamiliar, margin debt is the amount of "loans" taken out by market speculators to leverage up their equity positions. During normal bull markets margin debt will increase as the market continues to climb. This increased margin debt amplifies equity market prices. However, at some point speculators become nervous and begin to reduce their margin positions. This reduction in margin is like letting the air out of a balloon and deflates equity asset prices.
As can be seen on the below graphic, both the 2000 and 2007 market tops were signaled in advance by tops in margin debt (margin debt not inflation adjusted on this chart):
As can be seen on the below graphic, both the 2000 and 2007 market tops were signaled in advance by tops in margin debt (margin debt not inflation adjusted on this chart):
The following chart (source: D. Short) shows US equity margin debt adjusted for inflation. As can be seen, in both 2000 and 2007 inflation-adjusted margin debt peaked and then began to decline leading to the tops in the S&P 500 index. As such, margin debt rollovers acts as a good lead indicator of possible future market weakness.
A year-over-year contraction in margin debt tends to be negative for stocks as liquidity is removed from equity markets. Below is the latest YoY rate of change in margin debt (source: Yardini). Note in both the 2000 and 2007 bear markets margin debt bottomed below -40% and the recent bottoming and the return to growth in margin debt is encouraging.
U.S. Equity market Valuation Models
(Source: D. Short)
Below is a graph representing 4 different long-term valuation measures plotted back to 1900 (123 years):
As of last reading the average of these 4 measures places the U.S. stock market (S&P 500 index) as being 185% above its long term geometric mean. This remains the highest valuation in the history of the stock market going back to 1900 (greater than 3 standard deviations above the geometric mean).
- The Crestmont Research P/E Ratio
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor
- The Q Ratio, which is the total price of the market divided by its replacement cost
- The relationship of the S&P Composite price to a regression trendline
As of last reading the average of these 4 measures places the U.S. stock market (S&P 500 index) as being 185% above its long term geometric mean. This remains the highest valuation in the history of the stock market going back to 1900 (greater than 3 standard deviations above the geometric mean).
Another popular valuation metric is know as the "Buffett-Indicator". In an interview with Fortune magazine back in 2001 Warren Buffett remarked "it is probably the best single measure of where valuations stand at any given moment."
The indicator measures the price of Corporate Equities (Mkt Cap) to Gross Domestic Product (GDP) as a ratio going back to 1950. As can be seen below, the ratio of equity prices relative to last reported GDP has now moved below its recent peak and is currently in the "Overvalued" zone (> 32.2% above the detrended regression line).
7-Year Asset Class Real Return Forecast
(Source: GMO LLC)
Each month GMO (Grantham, Mayo, Van Otterloo & Co.) publishes a forward forecast for expected annual real rates of return (i.e. inflation adjusted) for a number of different asset classes with a 7 year forward outlook. They have historically had a very good track record (0.97 correlation) of estimating forward 7 year asset class returns based primarily upon current valuations combined with mean reversion. Charts are published following analysis of the previous months data.
We have followed GMO's methodology with interest for many years. In our experience we have found them to be conservative over the shorter term with a tenancy to make calls too early. HOWEVER, similar to Dr. John Hussman of Hussman Funds, they also tend to be right over the longer term. As such, we use their outlook as part of the valuation model within the ECAM 5 Factor model.
Above is their current forecast of expected real returns (after inflation) for the next 7 years broken down by asset class. It is clear based upon current market valuations GMO forecasts well below average annual investment returns in all asset classes with a 7 year forward time horizon (the historical real return of U.S. equities is +6.5% per year). This is important for those who may be soon retiring and expecting "average" returns on their equity and bond investments over the next 7 years. Current high market valuations make it a certainty forward returns over the next 7-10 years will be well below historical averages.
We have followed GMO's methodology with interest for many years. In our experience we have found them to be conservative over the shorter term with a tenancy to make calls too early. HOWEVER, similar to Dr. John Hussman of Hussman Funds, they also tend to be right over the longer term. As such, we use their outlook as part of the valuation model within the ECAM 5 Factor model.
Above is their current forecast of expected real returns (after inflation) for the next 7 years broken down by asset class. It is clear based upon current market valuations GMO forecasts well below average annual investment returns in all asset classes with a 7 year forward time horizon (the historical real return of U.S. equities is +6.5% per year). This is important for those who may be soon retiring and expecting "average" returns on their equity and bond investments over the next 7 years. Current high market valuations make it a certainty forward returns over the next 7-10 years will be well below historical averages.
Global Asset Class 10-year Expected Nominal Return Forecast
(data as of 31 August, 2026)
(Source: Research Affiliates)
(data as of 31 August, 2026)
(Source: Research Affiliates)
Below is the projected 10 year nominal (non-inflation adjusted) returns for the majority of global asset classes.
Data continues to point to developed market Small, developed Large Caps ex-US, Europe and Emerging market equities as providing the greatest annual equity returns over the next 10 years.
Data continues to point to developed market Small, developed Large Caps ex-US, Europe and Emerging market equities as providing the greatest annual equity returns over the next 10 years.
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Cycle Commentary
Below is a 20 year chart of the seasonal monthly performance of the Dow Jones Global Index. The number at the top of the column is the percentage of time the month had a positive return and at the bottom is the average percentage gain/loss for the month.
Dow Jones Global Index Market ($DJW)
As can be seen, over the past 20 years (2006-2025) the period October-April yearly offers the highest potential global equity market returns (cumulative +6.4% average return) while the period May-September offers little in total return relative to risk (0.0% cumulative average return). The month of April remains the strongest month of the calendar year with an 84% success rate and an average return of +2.3% .
S&P 500 Seasonality (historical 20 year look-back annual seasonality)
The S&P 500 Index 20 year seasonal tendency:
- flat for Jan
- in a rising trend for the first 2 weeks of Feb
- falls into an early March low
- a rising trend into a September peak
- pulls back to an early October low
- rises into year-end
Ned Davis Research 2026 Composite Model
The Ned Davis Research S&P 500 Cycle Composite Model is a predictive graphic that blends historical patterns:
It averages daily S&P 500 data over many decades to project a "typical" path for the index in a given year — in this case, a forecast for 2026 (a mid-term election year).
Recent analyses (as of late 2025) describe the 2026 Cycle Composite as showing:
- The 1-year seasonal cycle
- The 4-year Presidential election cycle
- The 10-year decennial cycle
It averages daily S&P 500 data over many decades to project a "typical" path for the index in a given year — in this case, a forecast for 2026 (a mid-term election year).
Recent analyses (as of late 2025) describe the 2026 Cycle Composite as showing:
- A strong start to the year with a rally into mid-April
- Potential weakness or a pullback in the summer/early fall (around mid-term election volatility)
- A low point in October
- A strong recovery into a positive year-end finish
The levels are not as important as the general trends/turning points as indicated by the Composite model.
U.S. 4-Year Presidential Election Cycle
* 2026 is Year-2 ("2nd Presidential Year") of the 4-year cycle
Presidential Cycle S&P 500 returns (inc. dividends):
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1988-Year 4: +12.40%
1989-Year1: +27.25% 1990-Year 2: -6.56% 1991-Year 3: +26.31% 1992-Year 4: +4.46% 1993-Year 1: +7.06% 1994-Year 2: -1.54% 1995-Year 3: +34.11% 1996-Year 4: +20.26% 1997-Year 1: +31.01% 1998-Year 2: +26.67% 1999-Year 3: +19.53% 2000-Year 4: -10.14% |
2001-Year 1: -13.04%
2002-Year 2: -23.37% 2003-Year 3: +26.38% 2004-Year 4: +8.99% 2005-Year 1: +3.00% 2006-Year 2: +13.62% 2007-Year 3: +3.53% 2008-Year 4: -38.49% 2009-Year 1: +23.45% 2010-Year 2: +12.78% 2011-Year 3: +0.00% 2012-Year 4: +13.41% 2013-Year 1: +29.60% |
2014-Year 2: +11.39%
2015-Year 3: -0.73% 2016-Year 4: +11.96% 2017-Year 1: +21.83% 2018-Year 2: -4.38% 2019-Year 3: +31.49% 2020-Year 4: +16.26% 2021-Year 1: +26.89% 2022-Year 2: -19.44% 2023-Year 3: +24.23% 2024-Year 4: +23.31% 2025-Year 1: 16.39% 2026-Year 2: TBA |
U.S. S&P 500 Index Bear Markets
(source: Ben Carlson, CFA)
(source: Ben Carlson, CFA)
Recessionary Bear Markets (1928-2022):
Non-Recessionary Bear Markets (1928-2022):
Recessionary vs Non-Recessionary Bear Market Returns (1928-2022):
