Sunday Market Note 10/25/2026
We have been in the bearish camp before the market fully realized it and profited from those trades. Now that the bearish sentiment momentum is really gearing up, I think we should be looking for the other side of that trade. Not at a random spot, but at a place where price action “should” go lower but doesn’t. A news failure event that I think is likely coming. I think it would look like a gap down that closes that day green.
I am watching for charts to come into the 200dma (maybe under cut and rally UR). A few days of really bearish price action (gap down and go) would help that cause and wash out any bulls that are remaining.
This week is full of news events with Mega Cap earnings and FOMC on Wednesday. The following week, on Tuesday Nov 3rd, are the elections and I think we get that news failure sometime in that time frame. Remember, I CAN NOT see the future, so I am reading the tape, the internals, and sentiment and making a best educated guess.
One of the charts that interests me is the Credit Spread chart. Part of my thesis is we get a blow off capitulation move in spreads that finishes off this bearish run. We probably get a spike in the VIX some place in the high 20s at least as well.
I still have my short on in the market and hope we get the flush I am talking about early in the week. My plan is to sell into strength. I do not want to stay short for a very long period of time. The market is built to go up and I think, if the way I am reading the tape is correct, that we are setting up for a really good end of year rally.
Like I mentioned above, I can not see the future. The timing and exactly how it all plays out could be slightly different than what I expect, but the take away message is: do not get attached to a bear thesis. I want to be selling to the late coming bears and flipping long as soon as we see the news failure signal.
Remember, shorting should be short lived, here’s to the (hopefully) continuation of the bull market in the next couple of weeks. Take care. -Jack
Watchlist:
OLLI, W, DG, DLTR, ELF, APA, DINO, DVN, EOG, FANG, PR, VNOM, XOM, LLY, MDT, HTFL, SPCX, AAPL, CRM, RBRK, ESTC, NTSK, OKTA, PLTR, SAIL, SHOP, TEAM, BUG, SQQQ