Chasing momentum
Quick summary:
The 2nd week of the Q4 competition is up and running - click here to join the action.
The market hit another all-time high last week, with SPX momentum holding strong despite the ongoing US government shutdown.
Payroll data showed a net loss of 32,000 jobs in September against expectations of 45,000 gains, strengthening the case for more Fed rate cuts.
Both SPX and VIX rose five days in a row, a rare pattern that can precede short-term volatility, though broader trends remain bullish.
Fewer economic reports are expected this week due to the shutdown, while markets look to Fed commentary and consumer data for direction.
The competition
Now in week two of Q4, markets remain steady near all-time highs while attention turns to the Fed minutes and upcoming remarks from policymakers.
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NOTE: For all those new to the whole thing, read more about it here or watch a video of Scott and myself guiding you through the survey, showing you all its features, and briefly explaining how the competition works.
Last week’s performance
Momentum just keeps building, with yet another all-time high. Despite the US government shutting down on Wednesday and the pharma tariffs being delayed, markets kept grinding higher. The jobs report was postponed, but earlier payroll data showed a net loss of 32,000 jobs in September against expectations of 45,000 gains. That means the official unemployment rate could be worsening, which ironically supports more rate cuts. If the shutdown continues, we might not even get the September inflation data, leaving the Fed to decide on rate cuts without the latest numbers.
Technically, there’s still nothing bearish in sight. Every dip in the SPX has been bought, and the uptrend remains strong. What stood out last week was that both SPX and the VIX rose five days in a row, a rare pattern that sometimes signals short-term corrections. The last four times this happened, SPX fell around 1.7% while volatility spiked 15%. Still, a repeat of “volmageddon” seems unlikely unless there’s a major policy shock or geopolitical event. A smaller volatility spike could happen as hedging demand stays high, but that’s often part of normal market behavior.
This week may be quieter than usual as the government shutdown delays several key reports, including trade data and jobless claims. The focus now shifts to the Federal Reserve, with minutes from its latest meeting expected to offer more clues on the path of future rate cuts. Treasury Secretary Scott Bessent and several Fed officials are also scheduled to speak, which could help guide expectations in the absence of fresh data. Consumer sentiment and credit data will still be released, giving some insight into household confidence and spending trends. With the S&P 500 coming off a third straight record close, the main question is whether momentum can hold as markets wait for more clarity from the Fed and a potential resolution to the shutdown.
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