'To win' in the market next year, presumably this '4th Industrial Revolution' persists; it will likely be necessary for money managers to expand horizons into areas they are fearful of treading; but we have plowed since last year.

Of course I am primarily talking about 'Application AI' (not so much hardware AI); and talking about hybrid and Quantum Computing; as well as 'new-era' 'Defense' (and that is both hardware and software); more so than mega-caps and other relatively tired, or conversely overextended valuation, tickers.

Sure, some of the bloated big-caps may advance somewhat (I hope so as it might help the backdrop psychology); but on a relative basis the smaller-caps should thrive, as comparatively has already been the case in much of 2025.

I want to show the multi-year chart before we look at this year's S&P activity. Of course S&P's extended; but allowing corrections there's viable alternatives to conventional views of a late-cycle stage (also with a handful of component issues dominating; a 'real' equal-weighted S&P isn't quite so stretched, yet).

I must add that a majority of investors probably don't have the patience (as I've recognized from some feedback this year; even as our picks have done well for the most part; some extraordinarily so like Quantum and drones 'if' you got in when we did; not from chasing the upside, as is ongoing again).

If I need to reiterate my admonitions from early this year and last year; only a small (or appropriate depending on tolerance for risk) portion of portfolios may be appropriate (if at all) for the majority of investors.. and if very risk-averse or financially ill-advised to speculate, well they might focus on Indexes or ETF's.

As to the 'macro' picture, perhaps you found the above long-term S&P chart I shared from a peer interesting; as I don't focus on 'wave counts' but aware of them and if-anything more from the old Wyckoff rather than Elliott approach. I don't think any of it is sacrosanct, which is why I do NOT believe stocks move in a technical-only fashion 'vacuum'; and therefore aren't viewed absent most fundamentals. (This year we have several small tickers trying to increase their authorized shares, which has sometimes weighed-on price moves; however it doesn't always mean 'dilution'; so companies should explain purposes better.)

A few graphics with 'ticker' remarks follow; and then more about this market.

Market X-ray: many don't trust this market; and that's 'with cause'. Sure, the S&P is extended; the majority of S&P higher levels got achieved from 'multiple expansion' not 'profitability expansion' (ah hah); so yes that can be on a leash as we look into next year. And also Nasdaq 'should' be leading the market in this easing environment; plus of course the more targeted focus we have on new-era and specialized Defense stocks and similar.

We've had six consecutive monthly gains despite periodic volatility and jitters that arise for various reasons. And every time it's been based on tariffs or any counter-Trump stuff, it's been absorbed as anticipated.. not to endorse these various policies, but the responses both from Gov'ment and markets generally were 'as expected'. I also expect to see the 'shutdown' end very quickly now.

I was going to do a video; but really we've discussed most everything and 'rocktober' is over, with our focus stocks positioned ideally to respond to numerous ER's coming over these next two weeks. Plus presuming Federal Government reopens soon, and Army / DoD / TSA (etc.) contracts start arriving; well, you know the prospects, and looking at charts alone won't give you the outcome; although several tickers are firming, perhaps in-anticipation thereof. 

Coming off the Fed Meeting, the Chairman emphasized rates might not drop in a trajectory most 'bulls' want; however a) they probably cut more often and not necessarily in December, and b) the stocks we're in generally are funded well 'now', so benefit whether or not the Fed cuts rates further soon. Actually most are far more dependent on Federal Contracts than the Federal Reserve.

Inflation is unlikely to gain headway; and may actually slip; so data may well support further cuts, but that's not my point. Just looking at charts and interest rates is fine; but it's too-often used as short-cuts to actually studying holdings. I'm eager to see how markets respond to ER's and guidance in the new week especially in stocks I'll mention in a moment; and as most will have mediocre Q3 reports. If that's absorbed, based on outlooks, well that's what will matter.

Bottom-line: this market is getting the 'benefit of the doubt' amid skeptics, and that degree of skepticism is indeed helping the bullish case. Seasonally we may indeed get the traditional upside; and 'rocktober' tactically may just have set-the-stage for the tailwinds that particularly help the smaller-caps.

This case for upside indeed would be helped by simply not seeing a macro disaster, which even the best of speculative growth stocks would be seriously challenged to hold together. That would be a scenario of 'sucking the oxygen' out of the market; but that is NOT the backdrop of what we have.. for now.

More By This Author:

Market Briefing For Monday, Oct. 27
Market Briefing For Tuesday, Oct. 21
Market Briefing For Monday, Oct. 20