BraVoCycles

Topping Pattern: Yields -> Stocks -> Commodities

At the 2000 and 2007 tops, yields peaked first, stocks second, commodities third.

The logic: higher rates slow the economy, stocks feel it next, commodities last.

Today, the 10-yr yield is still making new highs. Will the pattern repeat?

Short Positioning in Russell 2000

According to what I’ve seen, IWM had $3.3B of weekly outflows, its second-largest of 2026,

Stock Market Seasonality - Part 2

· October has a bad reputation because many corrections and bear markets ended in October.

· Since 1945, a pullback of 5% or more has ended in October 33 times, more than any other month. March and September are next, at 23 each.

· Since 1950, 6 of 12 bear markets bottomed in October.

· But oftentimes corrections end in September or in early October, and the market performance in October is not that bad on average.

· Since 1950, the S&P 500 has gained about 0.8% to 1% in a typical October, and finished higher a bit more than half the time. 

· Notably, in midterm years, October is the best of the calendar. Per Stock Trader’s Almanac, the gains are about +3.0% for the S&P and +3.2% for the Dow. November is close behind, about +2.7%, and up more often.

· There is also a difference in October’s performance in bull and bear markets, as the chart below shows.

· Last but not least, November-April is the favorable period for stock market returns.

Stock Market Seasonality - Part 1

· October marks the end of the seasonally unfavorable May-October period, often referred to as “Sell in May and Go Away.”

· The chart below shows how the Dow Jones Industrial Average compares to the average of the last 25 years.

· This seasonality pattern worked well this year for DJI, small-caps, and the equal-weight S&P 500, but not so much for the cap-weighted S&P 500 and the NASDAQ 100, which are dominated by several mega-caps, including the Magnificent 7 stocks.

NDX Technical analysis:

· NDX popped up on Friday above the Keltner channel with a bearish candle.

· Was it a spinning top or inverse hammer? A close call, probably the former.

· NDX should eventually visit the mid and bottom Keltner channels.

· Notice short- and long-term negative divergences in RSI and the Bullish Percentage Index; the latter looks really bad.