Technical Market Report For October 31, 2026

The good news is:

• Seasonality for next week has been very strong.

The Negatives

The first chart covers the past 6 months showing the S&P 500 (SPX) in red and a 10% trend (19 day EMA) of NYSE new highs (NY NH) in green.  Dashed vertical lines have been drawn on the 1st trading day of each month. 

NY NH: It is interesting to see NY NH rising on Friday while all of the major indices has a very bad day.

The next chart is similar to the first one except it shows the Nasdaq composite (OTC) in blue and OTC NH in green has been calculated with Nasdaq data.  

OTC NH also rose last week while the index was falling.  

The next chart covers the past 6 months showing the SPX in red and a 40% trend (4 day EMA) of NYSE new highs divided by new highs + new lows (NY HL Ratio), in blue.  Dashed horizontal lines have been drawn, on the Y axis at 10% levels for the indicator; the line is solid at the 50%, neutral level (equal numbers of new highs and new lows). 

NY HL Ratio went from bad to a little worse last week. 

The next chart is similar to the one above except it was calculated with Nasdaq data. The OTC is shown in blue while OTC HL Ratio is shown in red.

OTC HL Ratio improved from bad to a little better, last week.

The next chart covers the past 6 months showing the OTC in blue and a 10% trend (19 day EMA) of Nasdaq new lows (OTC NL) in brown.  OTC NL has been plotted on an inverted Y axis so decreasing numbers of new lows move the indicator upward (up is good). 

OTC NL continued rising last week, but remains near its lowest level in more than a year. 

The Positives

The next chart is similar to the previous one except it shows the SPX in red and NY NL, in blue, has been calculated with NYSE data.

NY NL continued to move upward last week. 

Seasonality

Next week includes the first 5 trading days of November during the 2nd year of the Presidential Cycle.  The tables below show the daily change, on a percentage basis, for that period.  

OTC data covers the period from 1963 to 2025 while SPX data runs from 1928 to 2025.  There are summaries for both the 2nd year of the Presidential Cycle and all years combined.  

Seasonality for the coming week has been positive by all measures.

Report for the first 5 days of November.

The number following the year represents its position in the Presidential Cycle.

The number following the daily return represents the day of the week; 1 = Monday, 2 = Tuesday etc.

OTC Presidential Year 2 (PY2)

               Day1      Day2      Day3      Day4      Day5      Totals

 1966-2      -0.30% 2   0.57% 3   0.40% 4   0.02% 5   0.77% 1     1.45%

 1970-2       0.15% 1  -0.17% 2   0.71% 3   0.45% 4   0.74% 5     1.87%

 1974-2      -0.26% 5  -0.68% 1   2.12% 2   0.18% 3   0.80% 4     2.17%

 1978-2       3.18% 3  -0.02% 4   0.75% 5  -0.36% 1  -1.96% 2     1.60%

 1982-2       0.89% 1   1.46% 2   2.35% 3   1.01% 4   0.90% 5     6.60%

 Avg          0.73%     0.23%     1.27%     0.26%     0.25%       2.74%

 1986-2       0.10% 1   0.21% 2   0.05% 3  -0.23% 4  -0.07% 5     0.06%

 1990-2       0.23% 4   1.77% 5   1.28% 1  -0.07% 2  -1.10% 3     2.12%

 1994-2      -0.68% 2  -0.05% 3   0.04% 4  -0.78% 5  -0.49% 1    -1.97%

 1998-2       1.67% 1  -0.68% 2   1.96% 3   0.74% 4   1.06% 5     4.74%

 2002-2       2.33% 5   2.63% 1   0.33% 2   1.27% 3  -2.98% 4     3.59%

 Avg          0.73%     0.78%     0.73%     0.19%    -0.71%       1.71%

 2006-2      -1.37% 3  -0.01% 4  -0.14% 5   1.51% 1   0.42% 2     0.41%

 2010-2      -0.10% 1   1.14% 2   0.27% 3   1.46% 4   0.06% 5     2.83%

 2014-2       0.18% 1  -0.33% 2  -0.06% 3   0.38% 4  -0.13% 5     0.04%

 2018-2       1.75% 4  -1.04% 5  -0.38% 1   0.64% 2   2.64% 3     3.62%

 2022-2      -0.89% 2  -3.36% 3  -1.73% 4   1.28% 5   0.85% 1    -3.84%

 Avg         -0.08%    -0.72%    -0.41%     1.05%     0.77%       0.61%

OTC summary for PY2 1966 - 2022

Averages      0.46%     0.10%     0.53%     0.50%     0.10%       1.69%

% Winners       60%       40%       73%       73%       60%         87%

MDD  11/3/2022  5.87% --  11/7/2002  2.98% --  11/7/1978  2.30%

OTC summary for all years 1963 - 2025

Averages      0.32%     0.15%     0.31%     0.28%     0.03%       1.08%

% Winners       67%       52%       67%       62%       57%         71%

MDD 11/6/2008  9.63% --  11/3/2022  5.87% --  11/7/2007  3.86%

SPX PY2

               Day1      Day2      Day3      Day4      Day5      Totals

 1930-2       0.89% 6   0.23% 1  -2.98% 3   0.18% 4  -3.36% 5    -5.04%

 1934-2      -0.45% 4   1.14% 5   0.90% 6   0.78% 1   1.88% 3     4.25%

 1938-2      -0.53% 2   0.38% 3   0.30% 4  -0.15% 5   0.30% 6     0.31%

 1942-2       0.64% 1  -0.42% 3   0.21% 4   1.27% 5   0.73% 6     2.43%

 1946-2       1.55% 5   0.73% 6   0.99% 1  -4.31% 3   0.82% 4    -0.22%

 1950-2       0.15% 3   0.87% 4   0.61% 5  -0.35% 6  -2.12% 1    -0.85%

 1954-2       0.35% 1   2.04% 3   1.17% 4  -0.34% 5   0.95% 1     4.18%

 1958-2       0.45% 1   0.91% 3   0.81% 4  -0.36% 5   0.59% 1     2.40%

 1962-2       1.06% 4   1.10% 5   1.04% 1   0.62% 3  -0.66% 4     3.16%

 Avg          0.71%     1.13%     0.92%    -0.95%    -0.09%       1.73%

 1966-2       0.76% 2   0.09% 3  -0.40% 4   0.31% 5  -0.10% 1     0.66%

 1970-2       0.31% 1   0.85% 2   0.20% 3  -0.34% 4   0.14% 5     1.16%

 1974-2      -0.03% 5  -1.08% 1   2.78% 2  -0.48% 3   0.62% 4     1.80%

 1978-2       3.97% 3  -1.28% 4   0.60% 5  -1.03% 1  -1.41% 2     0.85%

 1982-2       1.32% 1   1.49% 2   3.91% 3  -0.71% 4   0.22% 5     6.23%

 Avg          1.27%     0.01%     1.42%    -0.45%    -0.11%       2.14%

 1986-2       0.75% 1   0.16% 2   0.15% 3  -0.29% 4  -0.04% 5     0.73%

 1990-2       0.99% 4   1.57% 5   0.88% 1  -0.94% 2  -1.80% 3     0.70%

 1994-2      -0.83% 2  -0.41% 3   0.30% 4  -1.20% 5   0.17% 1    -1.97%

 1998-2       1.17% 1  -0.07% 2   0.71% 3   1.34% 4   0.64% 5     3.80%

 2002-2       1.71% 5   0.82% 1   0.78% 2   0.91% 3  -2.29% 4     1.94%

 Avg          0.76%     0.42%     0.56%    -0.04%    -0.66%       1.04%

 2006-2      -0.74% 3  -0.03% 4  -0.22% 5   1.13% 1   0.22% 2     0.36%

 2010-2       0.09% 1   0.78% 2   0.37% 3   1.93% 4   0.39% 5     3.56%

 2014-2      -0.01% 1  -0.28% 2   0.57% 3   0.38% 4   0.03% 5     0.69%

 2018-2       1.06% 4  -0.63% 5   0.56% 1   0.63% 2   2.12% 3     3.73%

 2022-2      -0.41% 2  -2.50% 3  -1.06% 4   1.36% 5   0.96% 1    -1.65%

 Avg          0.00%    -0.53%     0.04%     1.09%     0.75%       1.34%

SPX summary for PY2 1930 - 2022

Averages      0.59%     0.27%     0.55%     0.01%    -0.04%       1.38%

% Winners       71%       63%       83%       50%       67%         79%

MDD  11/7/1930  6.07% --  11/6/1946  4.31% --  11/3/2022  3.93%

SPX summary for all years 1928 - 2025

Averages      0.25%    -0.02%     0.29%     0.11%    -0.03%       0.59%

% Winners       65%       57%       66%       56%       53%         67%

MDD 11/11/1929  17.76% --  11/6/2008  10.03% --  11/6/1937  9.95%

November

Since 1963, over all years, the OTC in November has been up 73% of the time with an average gain of 2.0%.  During the 2nd year of the Presidential Cycle November has been up 73% time with an average gain of 3.5% The best November ever for the OTC was 2001 (+14.2%), the worst 2000 (-22.9%).

The average month has 21 trading days.  The chart below has been calculated by averaging the daily percentage change of the OTC for each of the 1st 11 trading days and each of the last 10.  In months when there were more than 21 trading days some of the days in the middle were not counted.  In months when there were less than 21 trading days some of the days in the middle of the month were counted twice.  Dashed vertical lines have been drawn after the 1st trading day and at 5 trading day intervals after that.  The line is solid on the 11th trading day, the dividing point.

In the chart below the blue line shows the average of the OTC in November over all years since 1963 while the black line shows the average during the 2nd year of the Presidential Cycle over the same period.

Since 1928 the SPX has been up 62% of the time in November with an average gain of 1.0%.  During the 2nd year of the Presidential Cycle the SPX has been up 67% of the time with an average gain of 2.4%.  The best November ever for the SPX was 1928 (+12.0%), the worst 1929 (-13.4%).

The chart below is similar to the one above except it shows the average daily performance over all years for the SPX in November in red and the performance during the 2nd year of the Presidential Cycle in black.

Since 1979 the Russell 2000 (R2K) has been up 70% of the time in November with an average gain of 2.6%.  During the 2nd year of the Presidential Cycle the R2K has been up 73% of the time in November with an average gain of 3.2%.  The best November ever for the R2K was 2020 (+18.3%), the worst 2008 (-12.0%).

The chart below is similar to those above except it shows the daily performance over all years of the R2K in November in magenta and the performance during the 2nd year of the Presidential Cycle in black.

Since 1885 the DJIA has been up 61% of the time in November with an average gain of 1.0%.  During the 2nd year of the Presidential Cycle the DJIA has been up 68% of the time in November with an average gain of 1.5%.  The best November ever for the DJIA was 1928 (+16.3%), the worst 1973 (-14.0%).

The chart below is similar to those above except it shows the daily performance over all years of the DJIA in November in light grey and the performance during the 2nd year of the Presidential Cycle in black.

Conclusion

The Russell 2000 continued as the strongest of the major indices last week.  AI issues represent nearly half of the equity markets capitalization and they are in trouble and this is trouble for the breadth indicators because a few mega cap issues control the cap weighted indices. 

The strongest sectors last week were Utilities (for the 5th week in a row) and Energy Services while the weakest were Electronics (for the 5th week in a row) and Precious Metals (for the 2nd week in a row).

I expect the major averages to be higher on Friday November 6 than they were on Friday October 30.

Last week the Russell 2000 was up while the other major indices were down, so I am calling last week’s positive forecast a tie.